UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended ~~June~~September 30, 2014



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Transition Period from to

Commission File No. 001-32260

Westlake Chemical Corporation

(Exact name of Registrant as specified in its charter)



Delaware		76-0346924
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2801 Post Oak Boulevard, Suite 600

Houston, Texas 77056

(Address of principal executive offices, including zip code)

(713) 960-9111

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No x

The number of shares outstanding of the registrant's sole class of common stock as of ~~July 30,~~October 31, 2014 was ~~133,486,747~~133,082,630 (on a post-split basis).

INDEX




Item	Page
PART I. FINANCIAL INFORMATION
1) Financial Statements	1
2) Management's Discussion and Analysis of Financial Condition and Results of Operations	2431
3) Quantitative and Qualitative Disclosures about Market Risk	3541
4) Controls and Procedures	3542

PART II. OTHER INFORMATION
1) Legal Proceedings	3643
1A) Risk Factors	3643
2) Unregistered Sales of Equity Securities and Use of Proceeds	3643
6) Exhibits	3744

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2014			December 31, 2013			September 30, 2014			December 31, 2013

	(in thousands of dollars, except par values and share amounts)						(in thousands of dollars, except par values and share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	876,067		$	461,301		$	813,468		$	461,301
Marketable securities	—			239,388			—			239,388
Accounts receivable, net	454,281			428,457			592,964			428,457
Inventories	437,519			471,879			500,552			471,879
Prepaid expenses and other current assets	20,468			13,888			18,884			13,888
Deferred income taxes	34,168			34,169			26,080			34,169
Total current assets	1,822,503			1,649,082			1,951,948			1,649,082
Property, plant and equipment, net	2,217,049			2,088,014			2,710,475			2,088,014
Equity investments	68,867			66,875			70,828			66,875
Other assets, net
Intangible assets, net	155,394			159,046			222,728			159,046
Deferred charges and other assets, net	105,556			97,892			170,304			97,892
Total other assets, net	260,950			256,938			393,032			256,938
Total assets	$	4,369,369		$	4,060,909		$	5,126,283		$	4,060,909
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	219,600		$	249,613		$	263,365		$	249,613
Accrued liabilities	167,329			155,245			309,671			155,245
Total current liabilities	386,929			404,858			573,036			404,858
Long-term debt	763,938			763,879			763,968			763,879
Deferred income taxes	458,790			437,976			513,773			437,976
Other liabilities	31,639			35,593			153,158			35,593
Total liabilities	1,641,296			1,642,306			2,003,935			1,642,306
Commitments and contingencies (Notes 7 and 15)
Stockholders' equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding	—			—			—			—
Common stock, $0.01 par value, 300,000,000 shares authorized; 134,681,372 and 134,580,208 shares issued at June 30, 2014 and December 31, 2013, respectively (Note 1)	1,347			1,346
Common stock, held in treasury, at cost; 1,197,617 and 1,252,922 shares at June 30, 2014 and December 31, 2013, respectively (Note 1)	(45,181		)	(46,220		)
Common stock, $0.01 par value, 300,000,000 shares authorized; 134,680,164 and 134,580,208 shares issued at September 30, 2014 and December 31, 2013, respectively (Note 1)							1,347			1,346
Common stock, held in treasury, at cost; 1,220,544 and 1,252,922 shares at September 30, 2014 and December 31, 2013, respectively (Note 1)							(53,248		)	(46,220		)
Additional paid-in capital	523,526			511,432			527,992			511,432
Retained earnings	2,248,513			1,954,661			2,394,203			1,954,661
Accumulated other comprehensive loss	(132		)	(2,616		)	(36,433		)	(2,616		)
Total stockholders' equity	2,728,073			2,418,603
Total liabilities and stockholders' equity	$	4,369,369		$	4,060,909
Total Westlake Chemical Corporation stockholders' equity							2,833,861			2,418,603
Noncontrolling interests							288,487			—
Total equity							3,122,348			2,418,603
Total liabilities and equity							$	5,126,283		$	4,060,909

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013			2014			2013			2014			2013

	(in thousands of dollars, except per share data and share amounts)												(in thousands of dollars, except per share data and share amounts)
Net sales	$	998,576		$	939,047		$	2,026,252		$	1,803,694		$	1,253,227		$	1,004,165		$	3,279,479		$	2,807,859
Cost of sales	692,605			665,560			1,433,271			1,302,398			891,707			699,694			2,324,978			2,002,092
Gross profit	305,971			273,487			592,981			501,296			361,520			304,471			954,501			805,767
Selling, general and administrative expenses	39,183			38,260			78,138			72,014			54,759			37,869			132,897			109,883
Income from operations	266,788			235,227			514,843			429,282			306,761			266,602			821,604			695,884
Other income (expense)
Interest expense	(9,539		)	(5,343		)	(18,696		)	(11,624		)	(9,486		)	(3,297		)	(28,182		)	(14,921		)
Other income (expense), net	4,601			(95		)	7,110			3,424
Other (expense) income, net													(2,670		)	(287		)	4,440			3,137
Income before income taxes	261,850			229,789			503,257			421,082			294,605			263,018			797,862			684,100
Provision for income taxes	92,407			83,973			175,782			151,919			124,449			92,728			300,231			244,647
Net income	$	169,443		$	145,816		$	327,475		$	269,163		170,156			170,290			497,631			439,453
Earnings per share (Note 1):
Net income attributable to noncontrolling interests													2,399			—			2,399			—
Net income attributable to Westlake Chemical Corporation													$	167,757		$	170,290		$	495,232		$	439,453
Earnings per common share attributable to Westlake Chemical Corporation (Note 1):
Basic	$	1.27		$	1.09		$	2.45		$	2.01		$	1.26		$	1.28		$	3.71		$	3.29
Diluted	$	1.26		$	1.09		$	2.44		$	2.01		$	1.25		$	1.27		$	3.69		$	3.27
Weighted average shares outstanding (Note 1):
Weighted average common shares outstanding (Note 1):
Basic	133,223,705			133,259,218			133,148,398			133,255,322			133,299,458			133,257,494			133,199,304			133,256,054
Diluted	133,767,890			133,791,190			133,690,836			133,804,546			133,846,059			133,811,108			133,743,145			133,806,758
Dividends per common share (Note 1)	$	0.1260		$	0.0938		$	0.2520		$	0.1875		$	0.1650		$	0.1125		$	0.4170		$	0.3000

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013			2014			2013			2014			2013

	(in thousands of dollars)												(in thousands of dollars)
Net income	$	169,443		$	145,816		$	327,475		$	269,163		$	170,156		$	170,290		$	497,631		$	439,453
Other comprehensive income (loss), net of income taxes
Pension and other post-retirement benefits liability
Pension and other post-retirement reserves adjustment (excluding amortization)	(31		)	(489		)	(31		)	(489		)	(31		)	(489		)	(62		)	(978		)
Amortization of benefits liability	226			695			445			1,309			240			695			685			2,004
Income tax provision on pension and other post-retirement benefits liability	(75		)	(80		)	(159		)	(316		)	(81		)	(78		)	(240		)	(394		)
Foreign currency translation adjustments	808			(820		)	(90		)	(1,390		)	(37,792		)	546			(37,882		)	(844		)
Available-for-sale investments
Unrealized holding gains on investments	2,364			—			4,831			—			2,129			205			6,960			205
Reclassification of net realized gains to net income	(1,237		)	—			(1,212		)	—			—			—			(1,212		)	—
Income tax provision on available-for-sale investments	(405		)	—			(1,300		)	—			(766		)	(74		)	(2,066		)	(74		)
Other comprehensive income (loss)	1,650			(694		)	2,484			(886		)
Other comprehensive (loss) income													(36,301		)	805			(33,817		)	(81		)
Comprehensive income	$	171,093		$	145,122		$	329,959		$	268,277		133,855			171,095			463,814			439,372
Comprehensive income attributable to noncontrolling interests, net of tax													2,399			—			2,399			—
Comprehensive income attributable to Westlake Chemical Corporation													$	131,456		$	171,095		$	461,415		$	439,372

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

Six Months Ended June 30,
2014 2013

(in thousands of dollars)
Cash flows from operating activities
Net income $ 327,475
$ 269,163
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 94,474
75,566
Provision for doubtful accounts 311
3,607
Amortization of debt issuance costs 730
729
Stock-based compensation expense 4,511
3,124
Loss from disposition of fixed assets 1,872
4,125
Deferred income taxes 19,359
60,425
Windfall tax benefits from share-based payment arrangements (4,436 ) (4,576 )
(Income) loss from equity method investments, net of dividends (1,239 ) 1,369
Other gains, net (526 ) —
Changes in operating assets and liabilities
Accounts receivable (27,367 ) (61,494 )
Inventories 34,360
(1,893 )
Prepaid expenses and other current assets (5,480 ) (7,947 )
Accounts payable (21,990 ) 5,217
Accrued liabilities 13,631
(32,382 )
Other, net (3,443 ) (59,553 )
Net cash provided by operating activities 432,242
255,480
Cash flows from investing activities
Acquisition of business —
(178,309 )
Additions to equity investments —
(6,113 )
Additions to property, plant and equipment (216,912 ) (297,873 )
Construction of assets pending sale-leaseback —
(136 )
Proceeds from disposition of assets 13
62
Proceeds from repayment of loan to affiliate —
167
Proceeds from sales and maturities of securities 342,045
209,785
Purchase of securities (117,332 ) (114,881 )
Settlements of derivative instruments (290 ) (1,588 )
Net cash provided by (used for) investing activities 7,524
(388,886 )
Cash flows from financing activities
Dividends paid (33,623 ) (25,120 )
Proceeds from exercise of stock options 4,187
2,656
Repurchase of common stock for treasury —
(13,283 )
Windfall tax benefits from share-based payment arrangements 4,436
4,576
Net cash used for financing activities (25,000 ) (31,171 )
Net increase (decrease) in cash and cash equivalents 414,766
(164,577 )
Cash and cash equivalents at beginning of period 461,301
790,078
Cash and cash equivalents at end of period $ 876,067
$ 625,501



	Common Stock				Common Stock, Held in Treasury										Accumulated Other Comprehensive Income (Loss)
	Number of Shares		Amount		Number of Shares		At Cost			Additional Paid-in Capital		Retained Earnings			Benefits Liability, Net of Tax			Cumulative Foreign Currency Exchange			Net Unrealized Holding Gains on Investments, Net of Tax		Noncontrolling Interests		Total

	(in thousands of dollars, except share amounts)
Balances at December 31, 2012	134,374,448		$	1,345	568,986		$	(13,302	)	$	495,581	$	1,399,472		$	(16,351	)	$	5,511		$	—	$	—	$	1,872,256
Net income	—		—		—		—			—		610,425			—			—			—		—		610,425
Other comprehensive (loss) income	—		—		—		—			—		—			9,655			(1,607		)	176		—		8,224
Common stock repurchased	—		—		683,936		(32,918		)	—		—			—			—			—		—		(32,918		)
Shares issued - stock- based compensation	225,924		1		—		—			3,436		—			—			—			—		—		3,437
Stock-based compensation, net of tax on stock options exercised	(20,164	)	—		—		—			12,415		—			—			—			—		—		12,415
Dividends paid	—		—		—		—			—		(55,236		)	—			—			—		—		(55,236		)
Balances at December 31, 2013	134,580,208		1,346		1,252,922		(46,220		)	511,432		1,954,661			(6,696		)	3,904			176		—		2,418,603
Net income	—		—		—		—			—		495,232			—			—			—		2,399		497,631
Other comprehensive income (loss)	—		—		—		—			—		—			383			(37,882		)	3,682		—		(33,817		)
Common stock repurchased	—		—		104,163		(9,495		)	—		—			—			—			—		—		(9,495		)
Shares issued - stock- based compensation	124,566		1		(136,541	)	2,467			3,034		—			—			—			—		—		5,502
Stock-based compensation, net of tax on stock options exercised	(24,610	)	—		—		—			13,526		—			—			—			—		—		13,526
Dividends paid	—		—		—		—					(55,690		)	—			—			—		—		(55,690		)
Issuance of Westlake Chemical Partners LP common units	—		—		—		—					—			—			—			—		286,088		286,088
Balances at September 30, 2014	134,680,164		$	1,347	1,220,544		$	(53,248	)	$	527,992	$	2,394,203		$	(6,313	)	$	(33,978	)	$	3,858	$	288,487	$	3,122,348

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Nine Months Ended September 30,
	2014			2013

	(in thousands of dollars)
Cash flows from operating activities
Net income	$	497,631		$	439,453
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	148,394			116,294
Provision for doubtful accounts	295			3,600
Amortization of debt issuance costs	1,172			1,093
Stock-based compensation expense	6,856			4,804
Loss from disposition of fixed assets	2,635			4,679
Deferred income taxes	34,459			83,443
Windfall tax benefits from share-based payment arrangements	(6,670		)	(5,056		)
(Income) loss from equity method investments, net of dividends	(3,199		)	1,586
Other gains, net	(495		)	—
Changes in operating assets and liabilities
Accounts receivable	6,055			(18,874		)
Inventories	80,492			(26,325		)
Prepaid expenses and other current assets	458			(5,038		)
Accounts payable	(98,769		)	19,518
Accrued liabilities	111,965			(15,755		)
Other, net	(5,155		)	(55,922		)
Net cash provided by operating activities	776,124			547,500
Cash flows from investing activities
Acquisition of business, net of cash acquired	(611,087		)	(178,309		)
Additions to equity investments	—			(23,338		)
Additions to property, plant and equipment	(311,183		)	(498,290		)
Construction of assets pending sale-leaseback	—			(136		)
Proceeds from disposition of assets	145			78
Proceeds from repayment of loan acquired	45,923			—
Proceeds from repayment of loan to affiliate	—			167
Proceeds from sales and maturities of securities	342,045			239,764
Purchase of securities	(117,332		)	(232,286		)
Settlements of derivative instruments	(689		)	(2,297		)
Net cash used for investing activities	(652,178		)	(694,647		)
Cash flows from financing activities
Capitalized debt issuance costs	(1,167		)	—
Dividends paid	(55,690		)	(40,204		)
Net proceeds from issuance of Westlake Chemical Partners LP common units	286,088			—
Proceeds from exercise of stock options	5,502			3,182
Repurchase of common stock for treasury	(9,495		)	(19,409		)
Windfall tax benefits from share-based payment arrangements	6,670			5,056
Net cash provided by (used for) financing activities	231,908			(51,375		)
Effect of exchange rate changes on cash and cash equivalents	(3,687		)	—
Net increase (decrease) in cash and cash equivalents	352,167			(198,522		)
Cash and cash equivalents at beginning of period	461,301			790,078
Cash and cash equivalents at end of period	$	813,468		$	591,556

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

1. Basis of Financial Statements

The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. GAAP") have not been included. These interim consolidated financial statements should be read in conjunction with the December 31, 2013 financial statements and notes thereto of Westlake Chemical Corporation (the "Company") included in the annual report on Form 10-K for the fiscal year ended December 31, 2013 (the "2013 Form 10-K"), filed with the SEC on February 21, 2014. These financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Company for the fiscal year ended December 31, 2013.

In the opinion of the Company's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company's financial position as of ~~June~~September 30, 2014, its results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2014 and 2013 and the changes in its cash position for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013.

Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2014 or any other interim period. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

On February 14, 2014, the Company's Board of Directors authorized a two-for-one split of the Company's common stock. Stockholders of record as of February 28, 2014 were entitled to one additional share for every share outstanding, which was distributed on March 18, 2014. The total number of authorized common stock shares and associated par value were unchanged by this stock split. All share amounts and per share data included in the accompanying consolidated financial statements and related notes have been restated to reflect the effect of the stock split.

In March 2014, the Company formed Westlake Chemical Partners LP ("WLKP") to operate, acquire and develop ethylene production facilities and related assets. On August 4, 2014, WLKP closed its initial public offering of 12,937,500 common units. See Note 19 for additional information. The Company consolidates WLKP and records a noncontrolling interest for the interest in WLKP not owned by the Company.

Recent Accounting Pronouncements

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued an accounting standards update on a comprehensive new revenue recognition standard that will supersede the existing revenue recognition guidance. The new accounting guidance creates a framework by which an entity will allocate the transaction price to separate performance obligations and recognize revenue when each performance obligation is satisfied. Under the new standard, entities will be required to use judgment and make estimates, including identifying performance obligations in a contract, estimating the amount of variable consideration to include in the transaction price, allocating the transaction price to each separate performance obligation and determining when an entity satisfies its performance obligations. The standard allows for either ~~“full retrospective”~~"full retrospective" adoption, meaning that the standard is applied to all of the periods presented with a cumulative catch-up as of the earliest period presented, or ~~“modified retrospective”~~"modified retrospective" adoption, meaning the standard is applied only to the most current period presented in the financial statements with a cumulative catch-up as of the current period. The accounting standard will be effective for reporting periods beginning after December 15, 2016. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows.

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

In August 2014, the FASB issued an accounting standards update on management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern. The new accounting guidance requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if "conditions or events raise substantial doubt about the entity's ability to continue as a going concern." The accounting standard will be effective for reporting periods

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

ending after December 15, 2016 and is not expected to have an impact on the Company's consolidated financial position, results of operations and cash flows.

2. Financial Instruments

Cash Equivalents

The Company had $747,008 and $263,967 of held-to-maturity securities with original maturities of three months or less, primarily consisting of corporate debt securities, classified as cash equivalents at ~~June~~September 30, 2014 and December 31, 2013, respectively. The Company's investments in held-to-maturity securities are held at amortized cost, which approximates fair value.

Available-for-Sale Marketable Securities

Investments in available-for-sale securities were classified as follows:


	June 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013
Current	$	—	$	239,388	$	—	$	239,388
Non-current	18,879		—		21,066		—
Total available-for-sale securities	$	18,879	$	239,388	$	21,066	$	239,388

The cost, gross unrealized gains, gross unrealized losses and fair value of the Company’s available-for-sale securities were as follows:


	June 30, 2014								September 30, 2014
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Equity securities	$	14,985	$	3,894	$	—	$	18,879	$	15,044	$	6,022	$	—	$	21,066
Total available-for-sale securities	$	14,985	$	3,894	$	—	$	18,879	$	15,044	$	6,022	$	—	$	21,066



	December 31, 2013
	Cost		Gross Unrealized Gains		Gross Unrealized Losses ⁽¹⁾			Fair Value
Debt securities
Corporate bonds	$	108,300	$	340	$	(69	)	$	108,571
U.S. government debt ⁽²⁾	106,335		60		(79		)	106,316
Asset-backed securities	24,478		34		(11		)	24,501
Total available-for-sale securities	$	239,113	$	434	$	(159	)	$	239,388

_____________


(1)	All unrealized loss positions were held at a loss for less than 12 months.


(2)	U.S. Treasury obligations, U.S. government agency obligations and U.S government agency mortgage-backed securities.

As of ~~June~~September 30, 2014 and December 31, 2013, net unrealized gains on the Company's available-for-sale securities of $~~2,495~~3,858 and $176, respectively, net of income tax expense of $~~1,399~~2,164 and $99, respectively, were recorded in accumulated other comprehensive income. See Note 10 for the fair value hierarchy of the Company’s available-for-sale securities.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

The proceeds from sales and maturities of available-for-sale securities and the gross realized gains and losses included in the consolidated statement of operations are reflected in the table below. The cost of securities sold was determined using the specific identification method. There were no sales or maturities of available-for-sale securities during the three and ~~six~~nine months ended ~~June~~September 30, 2013.


	Three Months Ended June 30,			Six Months Ended June 30,			Nine Months Ended September 30,
	2014			2014			2014
Proceeds from sales and maturities of securities	$	311,926		$	342,045		$	342,045
Gross realized gains	1,298			$	1,311		$	1,311
Gross realized losses	(61		)	$	(99	)	$	(99	)

~~Table of Contents~~

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

3. Accounts Receivable

Accounts receivable consist of the following:


	June 30, 2014			December 31, 2013			September 30, 2014			December 31, 2013
Trade customers	$	445,156		$	410,302		$	576,735		$	410,302
Affiliates	300			315			631			315
Allowance for doubtful accounts	(12,052		)	(11,741		)	(13,772		)	(11,741		)
	433,404			398,876			563,594			398,876
Federal and state taxes	7,512			20,820			5,374			20,820
Other	13,365			8,761			23,996			8,761
Accounts receivable, net	$	454,281		$	428,457		$	592,964		$	428,457

4. Inventories

Inventories consist of the following:


	June 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013
Finished products	$	218,817	$	232,658	$	268,969	$	232,658
Feedstock, additives and chemicals	159,099		180,646		166,268		180,646
Materials and supplies	59,603		58,575		65,315		58,575
Inventories	$	437,519	$	471,879	$	500,552	$	471,879

5. Property, Plant and Equipment

As of ~~June~~September 30, 2014, the Company had property, plant and equipment, net totaling $~~2,217,049~~2,710,475. The Company assesses these assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, including when negative conditions such as significant current or projected operating losses exist. Other factors considered by the Company when determining if an impairment assessment is necessary include, but are not limited to, significant changes or projected changes in supply and demand fundamentals (which would have a negative impact on operating rates or margins), new technological developments, new competitors with significant raw material or other cost advantages, adverse changes associated with the U.S. and world economies and uncertainties associated with governmental actions. Long-lived assets assessed for impairment are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Depreciation expense on property, plant and equipment of $~~39,859~~45,080 and $~~32,615~~32,460 is included in cost of sales in the consolidated statements of operations for the three months ended ~~June~~September 30, 2014 and 2013, respectively. Depreciation expense on property, plant and equipment of ~~$77,920~~$123,000 and ~~$63,535~~$95,995 is included in cost of sales in the consolidated statements of ~~operation~~operations for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, respectively.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

6. Other Assets

Amortization expense on intangible and other assets of $~~9,008~~9,283 and $~~7,959~~8,634 is included in the consolidated statements of operations for the three months ended ~~June~~September 30, 2014 and 2013, respectively. Amortization expense on intangible and other assets of ~~$17,284~~$26,566 and ~~$12,760~~$21,392 is included in the consolidated statements of operations for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, respectively.

Goodwill

Goodwill for the Olefins segment was $29,990 at ~~June~~September 30, 2014 and December 31, 2013. Goodwill for the Vinyls segment was $32,026 at ~~June~~September 30, 2014 and December 31, 2013. There were no changes in the carrying amount of goodwill by operating segments for the ~~six~~nine months ended ~~June~~September 30, 2014.

7. Long-Term Debt

Long-term debt consists of the following:



	September 30, 2014		December 31, 2013
3.60% senior notes due 2022	$	249,079	$	248,990
6 ½% senior notes due 2029	100,000		100,000
6 ¾% senior notes due 2032	250,000		250,000
6 ½% senior notes due 2035 (the "6 ½% GO Zone Senior Notes Due 2035")	89,000		89,000
6 ½% senior notes due 2035 (the "6 ½% IKE Zone Senior Notes Due 2035")	65,000		65,000
Loan related to tax-exempt waste disposal revenue bonds due 2027	10,889		10,889
Long-term debt, net	$	763,968	$	763,879

Revolving Credit Facility

The Company has a $400,000 senior secured revolving credit facility. In July 2014, the Company entered into a third amendment and restatement to the revolving credit facility. The amendment and restatement extended the scheduled maturity date of the facility from September 16, 2016 to July 17, 2019, reduced the interest rate and facility fee payable under the facility and amended the covenants restricting the Company’s ability to make distributions and acquisitions and make investments, among other things. The facility includes a provision permitting the Company to increase the size of the facility, up to four times, in increments of at least $25,000 each (up to a maximum of $200,000) under certain circumstances if lenders agree to commit to such an increase.

~~The annual impairment test~~At September 30, 2014, the Company had no borrowings outstanding under the revolving credit facility. Any borrowings under the facility will bear interest at either LIBOR plus a spread ranging from 1.75% to 1.25%, provided that so long as the Company is rated investment grade, the margin for ~~the Olefins segment's recorded goodwill was performed as of October 31, 2013. The annual impairment test for the Vinyls segment's recorded goodwill was performed as of April 30,~~ ~~2014~~LIBOR loans will not exceed 1.50%, or a base rate plus a spread ranging from 0.50% to 0.00%. The ~~impairment test~~revolving credit facility also requires an unused commitment fee of 0.25% per annum. All interest rates under the facility are subject to monthly grid pricing adjustments based on prior month average daily loan availability. The revolving credit facility matures on July 17, 2019. As of September 30, 2014, the Company had outstanding letters of credit totaling $32,399 and borrowing availability of $367,601 under the revolving credit facility.

The Company's revolving credit facility generally restricts the Company's ability to make distributions unless, on a pro forma basis after giving effect to the distribution, the borrowing availability under the facility equals or exceeds the greater of (1) 20% of the commitments under the facility and (2) $80,000; or the borrowing availability under the facility equals or exceeds the greater of (1) 15% of the commitments under the facility and (2) $60,000, and the Company's fixed charge coverage ratio is at least 1.0:1. However, the Company may make specified distributions up to an aggregate of $75,000, to be increased by 5% in 2015, and in each fiscal year thereafter, on an aggregate basis, for each fiscal year.

In order to make acquisitions or investments, the Company's revolving credit facility generally provides that (1) the Company must maintain a minimum borrowing availability of at least the greater of $60,000 or 15% of the total bank commitments under its revolving credit facility or (2) the Company must maintain a minimum borrowing availability of at least the greater of $50,000 or 12.5% of the total bank commitments under its revolving credit facility and meet a minimum fixed charge coverage ratio of 1.0:1 under its revolving credit facility. Notwithstanding the foregoing, the Company may make investments in the aggregate up to the greater of $50,000 and 1.25% of tangible assets and acquisitions in the aggregate up to

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

~~indicated that~~ the ~~Vinyls segment's goodwill was not impaired. There has been no impairment~~greater of ~~the Vinyls segment's goodwill since it was initially recorded.~~

~~Vinyls Segment Goodwill~~

~~The fair value~~$100,000 and 2.5% of the pipe and foundation building products business, the reporting unit assessed, was calculated using both a discounted cash flow methodology and a market value methodology. The discounted cash flow projections were basedtangible assets, if, on a ~~10-year forecast, from 2014~~pro forma basis after giving effect to ~~2023, to reflect~~ the ~~cyclicality of~~acquisition or investment, either (X) the North American housing and construction markets as the Company's pipe and foundation building products business is significantly influenced by said markets. The forecast was based on historical results and estimates by management, including their strategic and operational plans, and assumed a gradual increase in financial performance based on a housing market recovery in the United States. The future cash flows were discounted to present value using a discount rate of 8.8%.

The significant assumptions used in determining the fair value of the reporting unit using the market value methodology include the determination of appropriate market comparables and the estimated multiples of EBITDA a willing buyer is likely to pay.

~~Even if the fair value of the reporting unit decreased by 10%, the carrying value of the reporting unit would not exceed its fair value.~~

~~7. Long-Term Debt~~

~~Long-term debt consists of the following:~~

June 30,
2014 December 31,
2013
3.60% senior notes due 2022 $ 249,049
$ 248,990
6 ½% senior notes due 2029 100,000
100,000
6 ¾% senior notes due 2032 250,000
250,000
6 ½% senior notes due 2035 (the "6 ½% GO Zone Senior Notes Due 2035") 89,000
89,000
6 ½% senior notes due 2035 (the "6 ½% IKE Zone Senior Notes Due 2035") 65,000
65,000
Loan related to tax-exempt waste disposal revenue bonds due 2027 10,889
10,889
Long-term debt, net $ 763,938
$ 763,879

~~Revolving Credit Facility~~

~~The Company has a~~ ~~$400,000~~ ~~senior secured revolving credit facility. The facility includes a provision permitting the Company to increase the size of the facility, up to four times, in increments of at least~~ ~~$25,000~~ ~~each (up to a maximum of~~ ~~$150,000) under certain circumstances if lenders agree to commit to such an increase. At~~ ~~June 30, 2014, the Company had no borrowings outstanding under the revolving credit facility. Any borrowings~~borrowing availability under the facility ~~will bear interest~~equals or exceeds the greater of (A) 12.5% of the total bank commitments under the facility and (B) $50,000, but is less than the greater of (A) 15% of the total bank commitments and (B) $60,000, or (Y) the Company's fixed charge coverage ratio is at ~~either LIBOR plus a spread ranging from~~ ~~1.75%~~ to ~~2.25%~~ ~~or a base rate plus a spread ranging from~~ ~~0.25%~~ to ~~0.75%~~. least 1.0:1.

The revolving credit facility ~~also requires an unused commitment fee~~contains other customary covenants and events of ~~0.375%~~ ~~per annum. All interest rates under~~default that impose significant operating and financial restrictions on the ~~facility are subject~~Company. These restrictions, among other things, limit the occurrence of additional indebtedness and the Company's ability to ~~monthly grid pricing adjustments based on prior month average daily loan availability. The revolving credit facility matures on September 16, 2016. As of~~ ~~June 30, 2014, the Company had outstanding letters of credit totaling~~ ~~$17,773~~create liens, to engage in certain affiliate transactions and ~~borrowing availability of~~ ~~$382,227~~ ~~under the revolving credit facility.~~

~~Subsequent~~ to ~~June 30, 2014, the Company entered into a third amendment and restatement to the revolving credit facility. See Note 18 for additional information.~~engage in sale-leaseback transactions.

~~Table of Contents~~

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

8. Stock-Based Compensation

Under the Westlake Chemical Corporation 2013 Omnibus Incentive Plan (as amended and restated, the "2013 Plan"), all employees and nonemployee directors of the Company, as well as certain individuals who have agreed to become the Company's employees, are eligible for awards. Shares of common stock may be issued as authorized in the 2013 Plan. At the discretion of the administrator of the 2013 Plan, employees and nonemployee directors may be granted awards in the form of stock options, stock appreciation rights, stock awards, restricted stock units or cash awards (any of which may be a performance award). Total stock-based compensation expense related to the 2013 Plan was $~~2,289~~2,346 and $~~1,626~~1,680 for the three months ended ~~June~~September 30, 2014 and 2013, respectively, and ~~$4,511~~$6,856 and ~~$3,124~~$4,804 for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, respectively.

9. Derivative Instruments

Commodity Risk Management

The Company uses derivative instruments to reduce price volatility risk on raw materials and products as a substantial portion of its raw materials and products are commodities whose prices fluctuate as market supply and demand fundamentals change. Business strategies to protect against such instability include ethylene product feedstock flexibility and moving downstream into the olefins and vinyls products where pricing is more stable. The Company does not use derivative instruments to engage in speculative activities.

For derivative instruments that are designated and qualify as fair value hedges, the gains or losses on the derivative instruments, as well as the offsetting losses or gains on the hedged items attributable to the hedged risk, were included in cost of sales in the consolidated statements of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2013. The Company had no derivative instruments that were designated as fair value hedges for the three and ~~six~~nine months ended ~~June~~September 30, 2014.

Gains and losses from changes in the fair value of derivative instruments that are not designated as hedging instruments were included in gross profit in the consolidated statements of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2014 and 2013.

The exposure on commodity derivatives used for price risk management includes the risk that the counterparty will not pay if the market declines below the established fixed price. In such case, the Company would lose the benefit of the derivative differential on the volume of the commodities covered. In any event, the Company would continue to receive the market price on the actual volume hedged. The Company also bears the risk that it could lose the benefit of market improvements over the fixed derivative price for the term and volume of the derivative instruments (as such improvements would accrue to the benefit of the counterparty).

Disclosures related to the Company's derivative assets and derivative liabilities subject to enforceable master netting arrangements have not been presented as they are not material to the Company's consolidated balance sheets at ~~June~~September 30, 2014 and December 31, 2013.

~~The fair values of derivative instruments in the Company's consolidated balance sheets were as follows:~~

Derivative Assets
Balance Sheet Location Fair Value as of
June 30,
2014 December 31,
2013
Not designated as hedging instruments
Commodity forward contracts Accounts receivable, net $ 937
$ 296
Total derivative assets $ 937
$ 296

Derivative Liabilities
Balance Sheet Location Fair Value as of
June 30,
2014 December 31,
2013
Not designated as hedging instruments
Commodity forward contracts Accrued liabilities $ 924
$ 176
Total derivative liabilities $ 924
$ 176

910

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

The fair values of derivative instruments in the Company's consolidated balance sheets were as follows:



	Derivative Assets
	Balance Sheet Location	Fair Value as of
	Balance Sheet Location	September 30, 2014		December 31, 2013
Not designated as hedging instruments
Commodity forward contracts	Accounts receivable, net	$	451	$	296
Total derivative assets		$	451	$	296



	Derivative Liabilities
	Balance Sheet Location	Fair Value as of
	Balance Sheet Location	September 30, 2014		December 31, 2013
Not designated as hedging instruments
Commodity forward contracts	Accrued liabilities	$	6,477	$	176
Total derivative liabilities		$	6,477	$	176

The following tables reflect the impact of derivative instruments designated as fair value hedges and the related hedged item on the Company's consolidated statements of operations. For the three and ~~six~~nine months ended ~~June~~September 30, 2013, there was no material ineffectiveness with regard to the Company's qualifying fair value hedges.


Derivatives in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivative	Three Months Ended June 30,					Six Months Ended June 30,					Location of Gain (Loss) Recognized in Income on Derivative	Three Months Ended September 30,					Nine Months Ended September 30,
		2014		2013			2014		2013				2014		2013			2014		2013
Commodity forward contracts	Cost of sales	$	—	$	1,533		$	—	$	(110	)	Cost of sales	$	—	$	(232	)	$	—	$	(342	)

Hedged Items in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income on Hedged Items	Three Months Ended June 30,					Six Months Ended June 30,					Location of Gain (Loss) Recognized in Income on Hedged Items	Three Months Ended September 30,					Nine Months Ended September 30,
		2014		2013			2014		2013				2014		2013			2014		2013
Firm commitment designated as the hedged item	Cost of sales	$	—	$	(1,615	)	$	—	$	(220	)	Cost of sales	$	—	$	236		$	—	$	15

The impact of derivative instruments that have not been designated as hedges on the Company's consolidated statements of operations were as follows:


Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Three Months Ended June 30,				Six Months Ended June 30,					Location of Gain (Loss) Recognized in Income on Derivative	Three Months Ended September 30,					Nine Months Ended September 30,
		2014		2013		2014			2013			2014			2013		2014			2013
Commodity forward contracts	Gross profit	$	240	$	9,382	$	(371	)	$	16,717	Gross profit	$	(6,937	)	$	4,854	$	(7,308	)	$	9,897

See Note 10 for the fair value of the Company's derivative instruments.

10. Fair Value Measurements

The Company reports certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

The following tables summarize, by level within the fair value hierarchy, the Company's assets and liabilities that were accounted for at fair value on a recurring basis:


	June 30, 2014								September 30, 2014
	Level 1		Level 2			Total			Level 1			Level 2			Total
Derivative instruments
Risk management assets - Commodity forward contracts	$	430	$	507		$	937		$	428		$	23		$	451
Risk management liabilities - Commodity forward contracts	—		(924		)	(924		)	(119		)	(6,358		)	(6,477		)
Available-for-sale marketable securities	18,879		—			18,879			21,066			—			21,066

	December 31, 2013								December 31, 2013
	Level 1		Level 2			Total			Level 1			Level 2			Total
Derivative instruments
Risk management assets - Commodity forward contracts	$	48	$	248		$	296		$	48		$	248		$	296
Risk management liabilities - Commodity forward contracts	—		(176		)	(176		)	—			(176		)	(176		)
Available-for-sale marketable securities	91,595		147,793			239,388			91,595			147,793			239,388

The Level 2 measurements for the Company's commodity contracts are derived using forward curves supplied by industry-recognized and unrelated third-party services. The Level 2 measurements for the Company's available-for-sale securities are derived using market-based pricing provided by unrelated third-party services.

~~Table of Contents~~

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

There were no transfers in or out of Levels 1 and 2 of the fair value hierarchy for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013.

In addition to the financial assets and liabilities above, the Company has other financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts payable and long-term debt, all of which are recorded at carrying value. The amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments. The carrying and fair values of the Company's long-term debt are summarized in the table below. The Company's long-term debt instruments are publicly-traded. A market approach, based upon quotes from financial reporting services, is used to measure the fair value of the Company's long-term debt. Because the Company's long-term debt instruments may not be actively traded, the inputs used to measure the fair value of the Company's long-term debt are classified as Level 2 inputs within the fair value hierarchy.


	June 30, 2014				December 31, 2013				September 30, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
3.60% senior notes due 2022	$	249,049	$	250,510	$	248,990	$	236,905	$	249,079	$	247,633	$	248,990	$	236,905
6 ½% senior notes due 2029	100,000		115,750		100,000		109,490		100,000		114,624		100,000		109,490
6 ¾% senior notes due 2032	250,000		278,525		250,000		265,148		250,000		275,313		250,000		265,148
6 ½% GO Zone Senior Notes Due 2035	89,000		104,670		89,000		94,606		89,000		101,855		89,000		94,606
6 ½% IKE Zone Senior Notes Due 2035	65,000		76,445		65,000		69,094		65,000		74,389		65,000		69,094
Loan related to tax-exempt waste disposal revenue bonds due 2027	10,889		10,889		10,889		10,889		10,889		10,889		10,889		10,889

11. Income Taxes

The effective income tax rate was ~~34.9%~~37.6% for the ~~six~~nine months ended ~~June~~September 30, 2014. The effective income tax rate for the 2014 period was ~~below~~above the U.S. federal statutory rate of 35.0% primarily due to state ~~tax credits and~~income taxes, partially offset by the domestic manufacturing ~~deduction, mostly offset by state income taxes.~~deduction. The effective income tax rate was ~~36.1%~~35.8% for the ~~six~~nine months ended ~~June~~September 30, ~~2013~~.2013. The effective income tax rate for the 2013 period was above the U.S. federal statutory rate of 35.0% primarily due to state income taxes, partially offset by the domestic manufacturing deduction.

There was no material change to the total gross unrecognized tax benefits for the ~~six~~nine months ended ~~June~~September 30, 2014. Management anticipates that all of the gross unrecognized tax benefits of $2,501 will be recognized within the next twelve

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

months due to expiring statutes of limitations. The impact from the recognition of these tax benefits on the Company's effective tax rate is expected to be immaterial.

The Company recognizes penalties and interest accrued related to unrecognized tax benefits in income tax expense. As of ~~June~~September 30, 2014, the Company had no material accrued interest and penalties related to uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is no longer subject to examinations by tax authorities before the year 2007.

~~Table of Contents~~

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

12. Earnings per Share

The Company has unvested shares of restricted stock and restricted stock units outstanding that are considered participating securities and, therefore, computes basic and diluted earnings per share under the two-class method. Basic earnings per share for the periods are based upon the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share include the effect of certain stock options.


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013			2014			2013			2014			2013
Net income	$	169,443		$	145,816		$	327,475		$	269,163
Net income attributable to Westlake Chemical Corporation													$	167,757		$	170,290		$	495,232		$	439,453
Less:
Net income attributable to participating securities	(360		)	(512		)	(746		)	(1,091		)	(353		)	(587		)	(1,099		)	(1,691		)
Net income attributable to common shareholders	$	169,083		$	145,304		$	326,729		$	268,072		$	167,404		$	169,703		$	494,133		$	437,762

The following table reconciles the denominator for the basic and diluted earnings per share computations shown in the consolidated statements of operations:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013		2014		2013		2014		2013
Weighted average common shares—basic ⁽¹⁾	133,223,705		133,259,218		133,148,398		133,255,322		133,299,458		133,257,494		133,199,304		133,256,054
Plus incremental shares from:
Assumed exercise of options ⁽¹⁾	544,185		531,972		542,438		549,224		546,601		553,614		543,841		550,704
Weighted average common shares—diluted ⁽¹⁾	133,767,890		133,791,190		133,690,836		133,804,546		133,846,059		133,811,108		133,743,145		133,806,758

Earnings per share: ⁽¹⁾
Earnings per common share attributable to Westlake Chemical Corporation : ⁽¹⁾
Basic	$	1.27	$	1.09	$	2.45	$	2.01	$	1.26	$	1.28	$	3.71	$	3.29
Diluted	$	1.26	$	1.09	$	2.44	$	2.01	$	1.25	$	1.27	$	3.69	$	3.27

_____________


(1)	Share amounts and per share data for the three and ~~six~~nine months ended ~~June~~September 30, 2013 have been restated to reflect the effect of a two-for-one stock split on March 18, 2014. See Note 1 for additional information.

There were no options excluded from the computation of diluted earnings per share for the three and nine months ended September 30, 2014. Excluded from the computation of diluted earnings per share for the three and nine months ended September 30, 2013 are options to purchase ~~134,938~~137,324 and ~~142,912~~115,518 shares of common stock, ~~for the~~ ~~three months ended June 30, 2014 and 2013, respectively, and 102,480 and 108,000 shares of common stock for the six months ended June 30, 2014 and 2013,~~ respectively. These options were outstanding during the periods reported but were excluded because the effect of including them would have been antidilutive.

~~13. Pension and Post-Retirement Benefit Costs~~

~~Components of net periodic benefit cost are as follows:~~

Three Months Ended June 30, Six Months Ended June 30,
Pension
Post-retirement
Healthcare
Pension
Post-retirement
Healthcare
2014 2013 2014 2013 2014 2013 2014 2013
Service cost $ 84
$ 275
$ 5
$ 2
$ 167
$ 539
$ 11
$ 5
Interest cost 576
515
181
147
1,170
1,016
362
294
Expected return on
plan assets
(777 ) (713 ) —
—
(1,586 ) (1,427 ) —
—
Amortization of prior
service cost
74
74
13
21
148
148
25
42
Amortization of net loss 70
510
69
90
134
940
138
179
Net periodic benefit cost $ 27
$ 661
$ 268
$ 260
$ 33
$ 1,216
$ 536
$ 520

1213

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

13. Pension and Post-Retirement Benefit Costs

Components of net periodic benefit cost are as follows:



	Three Months Ended September 30,										Nine Months Ended September 30,
	Pension						Post-retirement Healthcare				Pension						Post-retirement Healthcare
	2014			2013			2014		2013		2014			2013			2014		2013
Service cost	$	331		$	275		$	6	$	2	$	498		$	815		$	16	$	7
Interest cost	1,138			515			185		147		2,309			1,531			548		442
Expected return on plan assets	(777		)	(713		)	—		—		(2,363		)	(2,140		)	—		—
Amortization of prior service cost	74			74			13		21		223			223			38		63
Amortization of net loss	71			510			82		90		204			1,449			220		269
Net periodic benefit cost	$	837		$	661		$	286	$	260	$	871		$	1,878		$	822	$	781

The Company contributed $~~965~~2,447 and ~~$388~~$776 to the Salaried pension plan in the first ~~six~~nine months of 2014 and 2013, respectively, and contributed $~~580~~916 and $~~350~~640 to the Wage pension plan in the first ~~six~~nine months of 2014 and 2013, respectively. The Company expects to make additional contributions of $~~1,812~~330 to the Salaried pension plan and $~~626~~290 to the Wage pension plan during the fiscal year ending December 31, 2014.

14. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive income (loss) by component for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013 were as follows:


	Benefits Liability, Net of Tax			Cumulative Foreign Currency Exchange			Net Unrealized Holding Gains on Investments, Net of Tax			Total			Benefits Liability, Net of Tax			Cumulative Foreign Currency Exchange			Net Unrealized Holding Gains on Investments, Net of Tax			Total
Balances at December 31, 2013	$	(6,696	)	$	3,904		$	176		$	(2,616	)	$	(6,696	)	$	3,904		$	176		$	(2,616	)
Other comprehensive (loss) income before reclassifications	(20		)	(90		)	3,096			2,986			(39		)	(37,882		)	4,459			(33,462		)
Amounts reclassified from accumulated other comprehensive loss	275			—			(777		)	(502		)	422			—			(777		)	(355		)
Net other comprehensive income (loss) for the period	255			(90		)	2,319			2,484			383			(37,882		)	3,682			(33,817		)
Balances at June 30, 2014	$	(6,441	)	$	3,814		$	2,495		$	(132	)
Balances at September 30, 2014													$	(6,313	)	$	(33,978	)	$	3,858		$	(36,433	)

Benefits
Liability,
Net of Tax

Cumulative
Foreign
Currency
Exchange
Total
Balances at December 31, 2012 $ (16,351 ) $ 5,511
$ (10,840 )
Other comprehensive loss before reclassifications (301 ) (1,390 ) (1,691 )
Amounts reclassified from accumulated other comprehensive loss 805
—
805
Net other comprehensive income (loss) for the period 504
(1,390 ) (886 )
Balances at June 30, 2013 $ (15,847 ) $ 4,121
$ (11,726 )



	Benefits Liability, Net of Tax			Cumulative Foreign Currency Exchange			Net Unrealized Holding Gains on Investments, Net of Tax		Total
Balances at December 31, 2012	$	(16,351	)	$	5,511		$	—	$	(10,840	)
Other comprehensive (loss) income before reclassifications	(601		)	(844		)	131		(1,314		)
Amounts reclassified from accumulated other comprehensive loss	1,233			—			—		1,233
Net other comprehensive income (loss) for the period	632			(844		)	131		(81		)
Balances at September 30, 2013	$	(15,719	)	$	4,667		$	131	$	(10,921	)

1314

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

The following table provides the details of the amounts reclassified from accumulated other comprehensive income (loss) into net income in the consolidated statements of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2014 and 2013:


Details about Accumulated Other Comprehensive Income (Loss) Components	Location of Reclassification (Income (Expense)) in Consolidated Statements of Operations	Three Months Ended June 30,						Six Months Ended June 30,						Location of Reclassification (Income (Expense)) in Consolidated Statements of Operations	Three Months Ended September 30,						Nine Months Ended September 30,
		2014			2013			2014			2013				2014			2013			2014			2013
Amortization of pension and other post-retirement items
Prior service costs	(1)	$	(87	)	$	(95	)	$	(173	)	$	(190	)	(1)	$	(87	)	$	(95	)	$	(261	)	$	(286	)
Net loss	(1)	(139		)	(600		)	(272		)	(1,119		)	(1)	(153		)	(600		)	(424		)	(1,718		)
		(226		)	(695		)	(445		)	(1,309		)		(240		)	(695		)	(685		)	(2,004		)
	Provision for income taxes	86			268			170			504			Provision for income taxes	92			267			263			771
		(140		)	(427		)	(275		)	(805		)		(148		)	(428		)	(422		)	(1,233		)
Net unrealized gains on available-for-sale investments
Realized gain on available-for-sale investments	Other income, net	1,237			—			1,212			—			Other income, net	—			—			1,212			—
	Provision for income taxes	(444		)	—			(435		)	—			Provision for income taxes	—			—			(435		)	—
		793			—			$	777		$	—			—			—			$	777		$	—
Total reclassifications for the period		$	653		$	(427	)	$	502		$	(805	)		$	(148	)	$	(428	)	$	355		$	(1,233	)

_____________


(1)	These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. For additional information, please read Note 10 (Employee Benefits) to the financial statements included in the 2013 Form 10-K.

15. Commitments and Contingencies

The Company is subject to environmental laws and regulations that can impose civil and criminal sanctions and that may require it to mitigate the effects of contamination caused by the release or disposal of hazardous substances into the environment. Under one law, the U.S. Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), an owner or operator of property may be held strictly liable for remediating contamination without regard to whether that person caused the contamination, and without regard to whether the practices that resulted in the contamination were legal at the time they occurred. Because several of the Company's production sites have a history of industrial use, it is impossible to predict precisely what effect these legal requirements will have on the Company.

Contract Disputes with Goodrich and PolyOne. In connection with the 1990 and 1997 acquisitions of the Goodrich Corporation ("Goodrich") chemical manufacturing complex in Calvert City, Kentucky, Goodrich agreed to indemnify the Company for any liabilities related to preexisting contamination at the complex. For its part, the Company agreed to indemnify Goodrich for post-closing contamination caused by the Company's operations. The soil and groundwater at the complex, which does not include the Company's nearby polyvinyl chloride ("PVC") facility, had been extensively contaminated under Goodrich's operations. In 1993, Goodrich spun off the predecessor of PolyOne Corporation ("PolyOne"), and that predecessor assumed Goodrich's indemnification obligations relating to preexisting contamination.

In 2003, litigation arose among the Company, Goodrich and PolyOne with respect to the allocation of the cost of remediating contamination at the site. The parties settled this litigation in December 2007 and the case was dismissed. In the settlement the parties agreed that, among other things: (1) PolyOne would pay 100% of the costs (with specified exceptions), net of recoveries or credits from third parties, incurred with respect to environmental issues at the Calvert City site from August 1, 2007 forward; (2) either the Company or PolyOne might, from time to time in the future (but not more than once every five years), institute an arbitration proceeding to adjust that percentage; and (3) the Company and PolyOne would negotiate a new environmental remediation utilities and services agreement to cover the Company's provision to, or on behalf of, PolyOne of certain environmental remediation services at the site. The current environmental remediation activities at the

1415

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

Calvert City complex do not have a specified termination date but are expected to last for the foreseeable future. The costs incurred by the Company that have been invoiced to PolyOne to provide the environmental remediation services were $3,284 in 2013. By letter dated March 16, 2010, PolyOne notified the Company that it was initiating an arbitration proceeding under the settlement agreement. In this proceeding, PolyOne seeks to readjust the percentage allocation of costs and to recover approximately $1,400 from the Company in reimbursement of previously paid remediation costs. The arbitration is currently stayed.

State Administrative Proceedings. There are several administrative proceedings in Kentucky involving the Company, Goodrich and PolyOne related to the same manufacturing complex in Calvert City. In 2003, the Kentucky Environmental and Public Protection Cabinet (the "Cabinet") re-issued Goodrich's Resource Conservation and Recovery Act ("RCRA") permit which requires Goodrich to remediate contamination at the Calvert City manufacturing complex. Both Goodrich and PolyOne challenged various terms of the permit in an attempt to shift Goodrich's clean-up obligations under the permit to the Company. The Company intervened in the proceedings. The Cabinet has suspended all corrective action under the RCRA permit in deference to a remedial investigation and feasibility study ("RIFS") being conducted, under the auspices of the U.S. Environmental Protection Agency ("EPA"), pursuant to an Administrative Settlement Agreement ("AOC"), which became effective on December 9, 2009. See "Federal Administrative Proceedings" below. The proceedings have been postponed. Periodic status conferences will be held to evaluate whether additional proceedings will be required.

Federal Administrative Proceedings. In May 2009, the Cabinet sent a letter to the EPA requesting the EPA's assistance in addressing contamination at the Calvert City site under CERCLA. In its response to the Cabinet also in May 2009, the EPA stated that it concurred with the Cabinet's request and would incorporate work previously conducted under the Cabinet's RCRA authority into the EPA's cleanup efforts under CERCLA. Since 1983, the EPA has been addressing contamination at an abandoned landfill adjacent to the Company's plant which had been operated by Goodrich and which was being remediated pursuant to CERCLA. During the past three years, the EPA has directed Goodrich and PolyOne to conduct additional investigation activities at the landfill and at the Company's plant. In June 2009, the EPA notified the Company that the Company may have potential liability under section 107(a) of CERCLA at its plant site. Liability under section 107(a) of CERCLA is strict and joint and several. The EPA also identified Goodrich and PolyOne, among others, as potentially responsible parties at the plant site. The Company negotiated, in conjunction with the other potentially responsible parties, the AOC and an order to conduct the RIFS. On July 12, 2013, the parties submitted separate draft RIFS reports to the EPA. The EPA has hired a contractor to complete the remedial investigation report.

Monetary Relief. Except as noted above with respect to the settlement of the contract litigation among the Company, Goodrich and PolyOne, none of the court, the Cabinet nor the EPA has established any allocation of the costs of remediation among the various parties that are involved in the judicial and administrative proceedings discussed above. At this time, the Company is not able to estimate the loss or reasonable possible loss, if any, on the Company's financial statements that could result from the resolution of these proceedings. Any cash expenditures that the Company might incur in the future with respect to the remediation of contamination at the complex would likely be spread out over an extended period. As a result, the Company believes it is unlikely that any remediation costs allocable to it will be material in terms of expenditures made in any individual reporting period.

In addition to the matters described above, the Company is involved in various routine legal proceedings incidental to the conduct of its business. The Company does not believe that any of these routine legal proceedings will have a material adverse effect on its financial condition, results of operations or cash flows.

~~Table of Contents~~

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

16. Share Capital

Common Stock

On May 16, 2014, the stockholders of the Company approved an amendment to the Company's Amended and Restated Certificate of Incorporation to increase the Company's authorized shares of common stock from 150,000,000 shares to 300,000,000 shares, par value $0.01 per share. The Company is now authorized to issue 300,000,000 shares of common stock, par value $0.01 per share, of which ~~134,681,372~~134,680,164 and 134,580,208 shares (on a post-split basis) were issued as of ~~June~~September 30, 2014 and December 31, 2013, respectively. Each share of common stock entitles the holder to one vote on all matters on which holders are permitted to vote, including the election of directors.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

Stock Repurchase Program

In August 2011, the Company's Board of Directors authorized a stock repurchase program of the Company’s common stock totaling $100,000 (the "2011 Program"). Purchases under the 2011 Program began in September 2011. As of ~~June~~September 30, 2014 and December 31, 2013, the Company had repurchased 1,357,085 and 1,252,922 shares, respectively, of its common stock (on a post-split basis) under this program. Shares repurchased under the 2011 Program are held by the Company as treasury stock and may be used for general corporate purposes, including for the 2013 Omnibus Incentive Plan. Beginning in May 2014, the Company began issuing treasury shares to employees and nonemployee directors for options exercised and for the ~~release~~settlement of restricted stock units. The cost of treasury shares issued was determined using the specific identification method.

17. Supplemental Information

Other Liabilities

Other liabilities were $153,158 and $35,593 at September 30, 2014 and December 31, 2013, respectively. Non-current pension obligation, which is a component of other liabilities, was $117,293 and $8,710 at September 30, 2014 and December 31, 2013, respectively. No other component of other liabilities was more than five percent of total liabilities.

18. Segment Information

The Company operates in two principal operating segments: Olefins and Vinyls. These segments are strategic business units that offer a variety of different products. The Company manages each segment separately as each business requires different technology and marketing strategies.


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013			2014			2013			2014			2013
Net external sales
Olefins
Polyethylene	$	475,503		$	413,693		$	962,647		$	834,461		$	498,450		$	460,105		$	1,461,097		$	1,294,566
Styrene, feedstock and other	223,550			209,648			459,204			371,725			204,647			219,234			663,851			590,959
Total Olefins	699,053			623,341			1,421,851			1,206,186			703,097			679,339			2,124,948			1,885,525
Vinyls
PVC, caustic soda and other	168,762			205,104			359,289			400,350			416,771			212,041			776,060			612,391
Building products	130,761			110,602			245,112			197,158			133,359			112,785			378,471			309,943
Total Vinyls	299,523			315,706			604,401			597,508			550,130			324,826			1,154,531			922,334
	$	998,576		$	939,047		$	2,026,252		$	1,803,694		$	1,253,227		$	1,004,165		$	3,279,479		$	2,807,859

Intersegment sales
Olefins	$	34,782		$	74,870		$	91,635		$	145,153		$	26,518		$	85,454		$	118,153		$	230,607
Vinyls	331			444			674			708			355			403			1,029			1,111
	$	35,113		$	75,314		$	92,309		$	145,861		$	26,873		$	85,857		$	119,182		$	231,718

Income (loss) from operations
Olefins	$	238,657		$	187,661		$	510,990		$	348,719		$	259,277		$	237,239		$	770,267		$	585,958
Vinyls	38,129			52,906			17,015			96,569			59,445			39,554			76,460			136,123
Corporate and other	(9,998		)	(5,340		)	(13,162		)	(16,006		)	(11,961		)	(10,191		)	(25,123		)	(26,197		)
	$	266,788		$	235,227		$	514,843		$	429,282		$	306,761		$	266,602		$	821,604		$	695,884

Depreciation and amortization
Olefins	$	26,721		$	26,554		$	53,368		$	49,900		$	26,443		$	26,515		$	79,811		$	76,415
Vinyls	21,623			13,534			40,791			25,418			27,336			14,089			68,127			39,507
Corporate and other	158			122			315			248			141			124			456			372
	$	48,502		$	40,210		$	94,474		$	75,566		$	53,920		$	40,728		$	148,394		$	116,294

Other income (expense), net
Olefins	$	1,199		$	1,151		$	2,653		$	5,162		$	1,609		$	728		$	4,262		$	5,889
Vinyls	(213		)	(520		)	(247		)	(946		)	1,189			(742		)	942			(1,687		)
Corporate and other	3,615			(726		)	4,704			(792		)	(5,468		)	(273		)	(764		)	(1,065		)
	$	4,601		$	(95	)	$	7,110		$	3,424		$	(2,670	)	$	(287	)	$	4,440		$	3,137

Provision for (benefit from) income taxes
Olefins	$	83,502		$	70,140		$	177,052		$	125,617		$	105,030		$	82,553		$	282,082		$	208,170
Vinyls	10,430			19,690			360			33,410			21,761			10,710			22,121			44,120
Corporate and other	(1,525		)	(5,857		)	(1,630		)	(7,108		)	(2,342		)	(535		)	(3,972		)	(7,643		)
	$	92,407		$	83,973		$	175,782		$	151,919		$	124,449		$	92,728		$	300,231		$	244,647

Capital expenditures
Olefins	$	43,448		$	28,040		$	72,522		$	78,080		$	48,519		$	27,577		$	121,041		$	105,656
Vinyls	62,262			118,983			143,382			219,300			44,067			172,565			187,449			391,864
Corporate and other	461			66			1,008			493			1,685			276			2,693			770
	$	106,171		$	147,089		$	216,912		$	297,873		$	94,271		$	200,418		$	311,183		$	498,290

A reconciliation of total segment income from operations to consolidated income before income taxes is as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013			2014			2013			2014			2013
Income from operations	$	266,788		$	235,227		$	514,843		$	429,282		$	306,761		$	266,602		$	821,604		$	695,884
Interest expense	(9,539		)	(5,343		)	(18,696		)	(11,624		)	(9,486		)	(3,297		)	(28,182		)	(14,921		)
Other income (expense), net	4,601			(95		)	7,110			3,424
Other (expense) income, net													(2,670		)	(287		)	4,440			3,137
Income before income taxes	$	261,850		$	229,789		$	503,257		$	421,082		$	294,605		$	263,018		$	797,862		$	684,100


	June 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013
Total assets
Olefins	$	1,607,210	$	1,557,510	$	1,740,878	$	1,557,510
Vinyls	1,808,849		1,740,595		2,898,250		1,740,595
Corporate and other	953,310		762,804		487,155		762,804
	$	4,369,369	$	4,060,909	$	5,126,283	$	4,060,909

19. Westlake Chemical Partners LP

Westlake Chemical Partners LP ("WLKP") is a publicly traded master limited partnership that was formed by the Company to operate, acquire and develop ethylene production facilities and related assets.

Initial Public Offering of WLKP

On August 4, 2014, WLKP completed its initial public offering of 12,937,500 common units at a price of $24.00 per unit, which included 1,687,500 units purchased by the underwriters pursuant to the exercise in full of their over-allotment option. Net proceeds to WLKP from the sale of the units was approximately $286,088, net of underwriting discounts, structuring fees and offering expenses (the "Offering Costs") of approximately $24,412. At the consummation of the offering, WLKP's assets consist of a 10.6% limited partner interest in Westlake Chemical OpCo LP ("OpCo"), as well as the general partner interest in

1617

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

~~18. Subsequent Events~~

~~Initial Public Offering of WLKP~~

In March 2014, the Company formed Westlake Chemical Partners LP ("WLKP") to operate, acquire and develop ethylene production facilities and related assets. On August 4, 2014, WLKP closed its initial public offering of 12,937,500 common units at a price of $24.00 per unit, which included 1,687,500 units purchased by the underwriters through an over-allotment option. Net proceeds to WLKP from the sale of the units was approximately $286,263, net of underwriting discounts, structuring fees and estimated offering expenses of approximately $24,237. At the consummation of this offering, WLKP's assets consist of a 10.6% limited partner interest in Westlake Chemical OpCo LP ("OpCo"), as well as the general partner interest in OpCo. The Company retained an 89.4% limited partner interest in OpCo and a significant interest in WLKP. The Company consolidates WLKP for financial reporting purposes as the Company has a controlling financial interest. The initial public offering represented the sale of 47.8% of the common and subordinated units in WLKP. OpCo used the net proceeds from the purchase of its limited partner interest to establish a cash reserve of ~~$55,400~~approximately $55,419 for turnaround expenditures, to reimburse approximately ~~$155,700~~$151,729 for capital expenditures incurred by the Company with respect to certain of the assets contributed to OpCo and to repay intercompany debt to the Company of approximately ~~$75,144.~~ $78,940.

The following table is a reconciliation of proceeds from the initial public ~~offering represented the sale of a 47.8% interest in WLKP.~~offering:

~~Amendment and Restatement of the Revolving Credit Facility~~



Total proceeds from the initial public offering	$	310,500
Less: Offering Costs	(24,412		)
Net proceeds from the initial public offering	286,088
Less: Cash retained by OpCo	(55,419		)
Net proceeds distributed to the Company from the initial public offering	$	230,669

20. Acquisition

On July 31, 2014, the Company ~~entered into a third amendment and restatement to~~acquired all the revolving credit facility. The amendment and restatement extended the scheduled maturity date of the facility from September 16, 2016 to July 17, 2019, reduced the interest rate and facility fee payable under the facility and, among other things, amended the covenants restricting the Company’s ability to make distributions and acquisitions and investments.

~~Acquisition of Vinnolit Holdings GmbH Group~~

~~In May 2014, the Company announced that it had entered into a definitive agreement to acquire~~equity interests in German-based Vinnolit Holdings GmbH and its subsidiary companies ("Vinnolit") ~~for approximately €490,000~~ from several entities associated with Advent International ~~Corporation.~~Corporation (the "Sellers"). Vinnolit is headquartered in Ismaning, Germany and is an integrated global leader in specialty PVC resins, with a combined annual capacity of 1.7 billion pounds of PVC, including specialty paste and suspension grades, 1.5 billion pounds of vinyl chloride monomer ("VCM") and 1.0 billion pounds of caustic soda. ~~This transaction closed~~The Vinnolit acquisition comprised six production facilities located in Burghausen, Gendorf, Cologne, Knapsack and Schkopau in Germany and Hillhouse in the United Kingdom. The Company also acquired Vinnolit's technical centers, including a research and development facility in Gendorf and an applications laboratory in Burghausen. The Company’s management believes that this strategic acquisition will enhance its strategy of integration and expansion into new markets and specialty products, in addition to growing the Company's global presence with a footprint in Europe and surrounding markets.

The purchase price of $736,224 was paid with available cash on hand. The acquisition is being accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed and the results of operations of this acquired business are included in the Vinyls segment.

The acquired business contributed net sales and net loss of $195,477 and $2,992, respectively, to the Company for the period from July 31, 2014 to September 30, 2014. The following unaudited consolidated pro forma information presents consolidated information as if the acquisition had occurred on January 1, 2013:

~~General~~

~~Subsequent events were evaluated through~~



	Pro Forma Nine Months Ended September 30,
	2014		2013
Net sales	$	4,016,935	$	3,747,619
Net income	$	550,667	$	480,964
Net income attributable to noncontrolling interests	2,399		—
Net income attributable to Westlake Chemical Corporation	$	548,268	$	480,964
Earnings per common share attributable to Westlake Chemical Corporation:
Basic	$	4.11	$	3.59
Diluted	$	4.09	$	3.58

The pro forma amounts above have been calculated after applying the Company’s accounting policies and adjusting the Vinnolit results to reflect (1) the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied from January 1, 2013; (2) the elimination of interest expense assuming the long-term debt paid off on behalf of the Sellers as of the acquisition date onhad been retired as of January 1, 2013; (3) the elimination of transaction-related costs; and (4) an adjustment to tax-effect the aforementioned pro forma adjustments using an estimated aggregate statutory income tax rate of the jurisdictions to which the ~~financial statements were issued.~~above adjustments

1718

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

~~19.~~relate. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the Vinnolit acquisition, are presented for illustrative purposes only and are not necessarily indicative of results that would have been achieved if the acquisition had occurred as of January 1, 2013 or of future operating performance.

For the nine months ended September 30, 2014, the Company recognized $11,235 of transaction-related costs. These costs are included in general and administrative expenses and other income, net in the consolidated statement of operations for the nine months ended September 30, 2014. The transaction-related costs included in other income, net pertained to losses incurred on forward foreign exchange contracts for the purchase consideration of Vinnolit.

The following table summarizes the purchase consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition. The preliminary allocation of the purchase consideration is based on management’s estimates, judgments and assumptions. These estimates, judgments and assumptions are subject to change upon final valuation and should be treated as preliminary values. Management estimated that the fair value of the net assets acquired equals consideration paid. Therefore, no goodwill was recorded. The final allocation of purchase consideration could include changes in the estimated fair value of (1) inventories; (2) property, plant and equipment; (3) equity investments; (4) trademark and trade name, developed technologies and customer relationships; (5) power purchase agreement liability; and (6) deferred income taxes.



Fair value of consideration transferred:
Cash paid to Sellers	$	309,619
Cash deposited in escrow ⁽¹⁾	13,390
Retirement of long-term debt as of July 31, 2014, on behalf of the Sellers ⁽²⁾	413,215
Total purchase consideration	$	736,224

Preliminary allocation of consideration transferred to net assets acquired:
Cash	$	125,137
Working capital, excluding inventory and cash ⁽³⁾	23,072
Inventories ⁽⁴⁾	114,961
Property, plant and equipment	471,123
Investments	51,552
Other assets ⁽⁵⁾	65,366
Intangible assets:
Trademarks and trade name (weighted average life of 20 years)	40,170
Developed technologies (weighted average life of 20 years)	31,600
Other intangibles (weighted average life of 9.4 years)	1,422
Deferred income tax asset - current	8,697
Deferred income tax asset - non-current	27,387
Pension obligation	(117,970		)
Other long-term liabilities	(10,723		)
Power purchase agreement liability ⁽⁶⁾	(10,826		)
Deferred income tax liability - current	(6,845		)
Deferred income tax liability - non-current	(77,899		)
Total identifiable net assets	736,224
Goodwill ⁽⁷⁾	—
Consideration transferred	$	736,224

_____________


(1)	None of the cash held in escrow is considered contingent consideration as it is expected to be released to the Sellers pending the Sellers’ satisfaction of general representations and warranties made in connection with the execution of the purchase agreement.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)


(2)	Vinnolit’s long-term debt paid on behalf of the Sellers was not legally assumed by Westlake in the acquisition and was a condition of the consummation of the purchase agreement. Therefore, the retirement has been included in the total purchase consideration.


(3)	The fair value of accounts receivable acquired is $181,826, with the gross contractual amount being $183,769. The Company expects $1,943 to be uncollectible.


(4)	An adjustment of approximately $16,900 was recorded to reflect Vinnolit's inventories at fair value and increased cost of sales by the same amount for the three months ended September 30, 2014.


(5)	Included in other assets was a loan acquired that was repaid prior to September 30, 2014.


(6)	A liability arising from unfavorable forward purchase contracts for the purchase of power was recognized at fair value. This liability will be amortized over a period of approximately 3.0 years, being the weighted-average life of the forward purchase contracts.


(7)	Management estimated that the fair value of the net assets acquired equals consideration paid. Therefore, no goodwill was recorded.

21. Related Party and Affiliate Transactions

InfraServ Knapsack GmbH & Co. KG, an on-site chemical complex provider in which the Company owns a 15% equity stake, provides electricity and technical services to the Company's Knapsack, Germany production facility. For the period from July 31, 2014 to September 30, 2014, the Company incurred charges aggregating approximately $11,581.

InfraServ Gendorf GmbH & Co. KG, an on-site chemical complex provider in which the Company owns an 11% equity stake, provides electricity and technical services to the Company's Gendorf, Germany production facility. For the period from July 31, 2014 to September 30, 2014, the Company incurred charges aggregating approximately $10,489.

22. Subsequent Events

Subsequent events were evaluated through the date on which the financial statements were issued.

23. Guarantor Disclosures

The Company's payment obligations under the 3.60% senior notes due 2022 are fully and unconditionally guaranteed by each of its current and future domestic subsidiaries that guarantee other debt of the Company or of another guarantor of the 3.60% senior notes due 2022 in excess of $5,000 (the "Guarantor Subsidiaries"). ~~Each~~Except for OpCo, which is less than 100% owned, each Guarantor Subsidiary is 100% owned by Westlake Chemical ~~Corporation.~~Corporation (the "100% Owned Guarantor Subsidiaries"). See Note 19 regarding WLKP’s 10.6% limited partnership interest in OpCo. The initial public offering of WLKP resulted in OpCo ceasing to be a 100% owned subsidiary of the Company. OpCo has been presented as a less than 100% owned guarantor subsidiary in each of the tables below, including for periods prior to the initial public offering of WLKP. These guarantees are the joint and several obligations of the Guarantor Subsidiaries. The following unaudited condensed consolidating financial information presents the financial condition, results of operations and cash flows of Westlake Chemical Corporation, the 100% owned Guarantor Subsidiaries, OpCo and the remaining subsidiaries that do not guarantee the 3.60% senior notes due 2022 (the "Non-Guarantor Subsidiaries"), together with consolidating eliminations necessary to present the Company's results on a consolidated basis.

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

Condensed Consolidating Financial Information as of ~~June~~September 30, 2014


	Westlake Chemical Corporation		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated		Westlake Chemical Corporation		100% Owned Guarantor Subsidiaries		OpCo (Less Than 100% Owned Guarantor Subsidiary)		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets
Cash and cash equivalents	$	833,650	$	8,819	$	33,598	$	—		$	876,067	$	652,709	$	1,644	$	89,144	$	69,971	$	—		$	813,468
Marketable securities	—		—		—		—			—
Accounts receivable, net	12,499		995,379		4,145		(557,742		)	454,281		15,064		1,377,250		58,106		170,833		(1,028,289		)	592,964
Inventories	—		419,659		17,860		—			437,519		—		385,826		5,551		109,175		—			500,552
Prepaid expenses and other current assets	95		18,169		2,204		—			20,468		137		14,737		303		3,707		—			18,884
Deferred income taxes	441		33,422		305		—			34,168		342		25,446		—		292		—			26,080
Total current assets	846,685		1,475,448		58,112		(557,742		)	1,822,503		668,252		1,804,903		153,104		353,978		(1,028,289		)	1,951,948
Property, plant and equipment, net	—		2,210,754		6,295		—			2,217,049		—		1,451,807		806,648		452,020		—			2,710,475
Equity investments	3,148,210		103,650		30,186		(3,213,179		)	68,867		3,878,703		1,207,569		—		356,286		(5,371,730		)	70,828
Other assets, net	32,535		231,938		1,249		(4,772		)	260,950		34,847		351,271		61,679		137,990		(192,755		)	393,032
Total assets	$	4,027,430	$	4,021,790	$	95,842	$	(3,775,693	)	$	4,369,369	$	4,581,802	$	4,815,550	$	1,021,431	$	1,300,274	$	(6,592,774	)	$	5,126,283
Current liabilities
Accounts payable	$	533,491	$	204,830	$	14,870	$	(533,591	)	$	219,600	$	979,414	$	157,562	$	29,856	$	100,129	$	(1,003,596	)	$	263,365
Accrued liabilities	12,817		177,648		1,015		(24,151		)	167,329		15,448		238,225		3,412		77,279		(24,693		)	309,671
Total current liabilities	546,308		382,478		15,885		(557,742		)	386,929		994,862		395,787		33,268		177,408		(1,028,289		)	573,036
Long-term debt	753,049		10,889		—		—			763,938		753,079		10,889		188,523		—		(188,523		)	763,968
Deferred income taxes	—		462,930		632		(4,772		)	458,790		—		473,343		1,507		43,155		(4,232		)	513,773
Other liabilities	—		31,599		40		—			31,639		—		31,616		—		121,542		—			153,158
Stockholders' equity	2,728,073		3,133,894		79,285		(3,213,179		)	2,728,073
Total liabilities and stockholders' equity	$	4,027,430	$	4,021,790	$	95,842	$	(3,775,693	)	$	4,369,369
Total liabilities												1,747,941		911,635		223,298		342,105		(1,221,044		)	2,003,935
Total Westlake Chemical Corporation stockholders' equity												2,833,861		3,903,915		798,133		669,682		(5,371,730		)	2,833,861
Noncontrolling interests												—		—		—		288,487		—			288,487
Total equity												2,833,861		3,903,915		798,133		958,169		(5,371,730		)	3,122,348
Total liabilities and equity												$	4,581,802	$	4,815,550	$	1,021,431	$	1,300,274	$	(6,592,774	)	$	5,126,283

1821

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

Condensed Consolidating Financial Information as of December 31, 2013

Westlake
Chemical
Corporation

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations Consolidated
Balance Sheet
Current assets
Cash and cash equivalents $ 420,948
$ 6,227
$ 34,126
$ —
$ 461,301
Marketable securities 239,388
—
—
—
239,388
Accounts receivable, net 3,879
738,156
2,755
(316,333 ) 428,457
Inventories —
456,306
15,573
—
471,879
Prepaid expenses and other
current assets
778
11,312
1,798
—
13,888
Deferred income taxes 441
33,422
306
—
34,169
Total current assets 665,434
1,245,423
54,558
(316,333 ) 1,649,082
Property, plant and equipment, net —
2,081,091
6,923
—
2,088,014
Equity investments 2,815,752
100,326
31,518
(2,880,721 ) 66,875
Other assets, net 15,393
246,125
1,199
(5,779 ) 256,938
Total assets $ 3,496,579
$ 3,672,965
$ 94,198
$ (3,202,833 ) $ 4,060,909
Current liabilities
Accounts payable $ 316,652
$ 223,134
$ 10,649
$ (300,822 ) $ 249,613
Accrued liabilities 8,334
161,140
1,282
(15,511 ) 155,245
Total current liabilities 324,986
384,274
11,931
(316,333 ) 404,858
Long-term debt 752,990
10,889
—
—
763,879
Deferred income taxes —
443,026
729
(5,779 ) 437,976
Other liabilities —
35,533
60
—
35,593
Stockholders' equity 2,418,603
2,799,243
81,478
(2,880,721 ) 2,418,603
Total liabilities and
stockholders' equity $ 3,496,579
$ 3,672,965
$ 94,198
$ (3,202,833 ) $ 4,060,909

~~Table of Contents~~

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information for the~~ ~~Three Months Ended June 30, 2014~~

Westlake
Chemical
Corporation

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Operations
Net sales $ —
$ 988,944
$ 11,753
$ (2,121 ) $ 998,576
Cost of sales —
683,790
10,936
(2,121 ) 692,605
Gross profit —
305,154
817
—
305,971
Selling, general and administrative
expenses
529
37,231
1,423
—
39,183
(Loss) income from operations (529 ) 267,923
(606 ) —
266,788
Interest expense (9,535 ) (4 ) —
—
(9,539 )
Other income (expense), net 7,137
(1,743 ) (793 ) —
4,601
(Loss) income before income taxes (2,927 ) 266,176
(1,399 ) —
261,850
(Benefit from) provision for income taxes (1,039 ) 93,595
(149 ) —
92,407
Equity in net income of subsidiaries 171,331
—
—
(171,331 ) —
Net income (loss) $ 169,443
$ 172,581
$ (1,250 ) $ (171,331 ) $ 169,443
Comprehensive income (loss) $ 171,093
$ 172,701
$ (442 ) $ (172,259 ) $ 171,093

~~Condensed Consolidating Financial Information for the~~ ~~Three Months Ended June 30, 2013~~

Westlake
Chemical
Corporation

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Operations
Net sales $ —
$ 928,782
$ 13,684
$ (3,419 ) $ 939,047
Cost of sales —
657,457
11,522
(3,419 ) 665,560
Gross profit —
271,325
2,162
—
273,487
Selling, general and administrative
expenses
552
36,055
1,653
—
38,260
(Loss) income from operations (552 ) 235,270
509
—
235,227
Interest expense (5,332 ) (11 ) —
—
(5,343 )
Other (expense) income, net (404 ) 1,638
(1,329 ) —
(95 )
(Loss) income before income taxes (6,288 ) 236,897
(820 ) —
229,789
(Benefit from) provision for income taxes (2,258 ) 86,401
(170 ) —
83,973
Equity in net income of subsidiaries 149,846
—
—
(149,846 ) —
Net income (loss) $ 145,816
$ 150,496
$ (650 ) $ (149,846 ) $ 145,816
Comprehensive income (loss) $ 145,122
$ 150,622
$ (1,470 ) $ (149,152 ) $ 145,122

~~Table of Contents~~

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information for the Six Months Ended June 30, 2014~~

Westlake
Chemical
Corporation

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Operations
Net sales $ —
$ 2,009,373
$ 20,870
$ (3,991 ) $ 2,026,252
Cost of sales —
1,418,140
19,122
(3,991 ) 1,433,271
Gross profit —
591,233
1,748
—
592,981
Selling, general and administrative
expenses
1,075
74,294
2,769
—
78,138
(Loss) income from operations (1,075 ) 516,939
(1,021 ) —
514,843
Interest expense (18,690 ) (6 ) —
—
(18,696 )
Other income (expense), net 12,351
(3,834 ) (1,407 ) —
7,110
(Loss) income before income taxes (7,414 ) 513,099
(2,428 ) —
503,257
(Benefit from) provision for income taxes (2,597 ) 178,705
(326 ) —
175,782
Equity in net income of subsidiaries 332,292
—
—
(332,292 ) —
Net income (loss) $ 327,475
$ 334,394
$ (2,102 ) $ (332,292 ) $ 327,475
Comprehensive income (loss) $ 329,959
$ 334,649
$ (2,192 ) $ (332,457 ) $ 329,959

~~Condensed Consolidating Financial Information for the Six Months Ended June 30, 2013~~

Westlake
Chemical
Corporation

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Operations
Net sales $ —
$ 1,784,867
$ 24,224
$ (5,397 ) $ 1,803,694
Cost of sales —
1,286,743
21,052
(5,397 ) 1,302,398
Gross profit —
498,124
3,172
—
501,296
Selling, general and administrative
expenses
1,062
67,764
3,188
—
72,014
(Loss) income from operations (1,062 ) 430,360
(16 ) —
429,282
Interest expense (11,590 ) (34 ) —
—
(11,624 )
Other income (expense), net 3,905
1,348
(1,829 ) —
3,424
(Loss) income before income taxes (8,747 ) 431,674
(1,845 ) —
421,082
(Benefit from) provision for income taxes (3,132 ) 155,452
(401 ) —
151,919
Equity in net income of subsidiaries 274,778
—
—
(274,778 ) —
Net income (loss) $ 269,163
$ 276,222
$ (1,444 ) $ (274,778 ) $ 269,163
Comprehensive income (loss) $ 268,277
$ 276,726
$ (2,834 ) $ (273,892 ) $ 268,277

~~Table of Contents~~

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information for the~~ ~~Six Months Ended June 30, 2014~~

Westlake
Chemical
Corporation

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Cash Flows
Cash flows from operating activities
Net income (loss) $ 327,475
$ 334,394
$ (2,102 ) $ (332,292 ) $ 327,475
Adjustments to reconcile net income
   (loss) to net cash (used for) provided
   by operating activities

Depreciation and amortization 730
93,403
1,071
—
95,204
Deferred income taxes (292 ) 19,744
(93 ) —
19,359
Net changes in working capital
   and other
(336,669 ) (3,271 ) (2,148 ) 332,292
(9,796 )
Net cash (used for) provided by
   operating activities
(8,756 ) 444,270
(3,272 ) —
432,242
Cash flows from investing activities
Additions to property, plant and
   equipment
—
(216,529 ) (383 ) —
(216,912 )
Proceeds from disposition of assets —
12
1
—
13
Proceeds from sales and maturities of
   securities
342,045
—
—
—
342,045
Purchase of securities (117,332 ) —
—
—
(117,332 )
Settlements of derivative instruments —
(290 ) —
—
(290 )
Net cash provided by (used for)
   investing activities
224,713
(216,807 ) (382 ) —
7,524
Cash flows from financing activities
Intercompany financing 221,745
(224,871 ) 3,126
—
—
Dividends paid (33,623 ) —
—
—
(33,623 )
Proceeds from exercise of stock options 4,187
—
—
—
4,187
Windfall tax benefits from share-based
   payment arrangements
4,436
—
—
—
4,436
Net cash provided by (used for)
   financing activities
196,745
(224,871 ) 3,126
—
(25,000 )
Net increase (decrease) in cash and
   cash equivalents
412,702
2,592
(528 ) —
414,766
Cash and cash equivalents at beginning
   of period
420,948
6,227
34,126
—
461,301
Cash and cash equivalents at end of period $ 833,650
$ 8,819
$ 33,598
$ —
$ 876,067



	Westlake Chemical Corporation		100% Owned Guarantor Subsidiaries		OpCo (Less Than 100% Owned Guarantor Subsidiary)		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets
Cash and cash equivalents	$	420,948	$	6,227	$	—	$	34,126	$	—		$	461,301
Marketable securities	239,388		—		—		—		—			239,388
Accounts receivable, net	3,879		666,344		71,812		2,755		(316,333		)	428,457
Inventories	—		339,929		116,377		15,573		—			471,879
Prepaid expenses and other current assets	778		11,055		257		1,798		—			13,888
Deferred income taxes	441		28,974		4,448		306		—			34,169
Total current assets	665,434		1,052,529		192,894		54,558		(316,333		)	1,649,082
Property, plant and equipment, net	—		1,318,119		762,972		6,923		—			2,088,014
Equity investments	2,815,752		636,461		10,411		31,518		(3,427,267		)	66,875
Other assets, net	15,393		423,901		75,197		1,199		(258,752		)	256,938
Total assets	$	3,496,579	$	3,431,010	$	1,041,474	$	94,198	$	(4,002,352	)	$	4,060,909
Current liabilities
Accounts payable	$	316,652	$	100,570	$	122,564	$	10,649	$	(300,822	)	$	249,613
Accrued liabilities	8,334		134,452		26,688		1,282		(15,511		)	155,245
Total current liabilities	324,986		235,022		149,252		11,931		(316,333		)	404,858
Long-term debt	752,990		10,889		252,973		—		(252,973		)	763,879
Deferred income taxes	—		260,171		182,855		729		(5,779		)	437,976
Other liabilities	—		34,571		962		60		—			35,593
Total equity	2,418,603		2,890,357		455,432		81,478		(3,427,267		)	2,418,603
Total liabilities and equity	$	3,496,579	$	3,431,010	$	1,041,474	$	94,198	$	(4,002,352	)	$	4,060,909

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

Condensed Consolidating Financial Information for the ~~Six~~Three Months Ended ~~June~~September 30, ~~2013~~2014

Westlake
Chemical
Corporation

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Cash Flows
Cash flows from operating activities
Net income (loss) $ 269,163
$ 276,222
$ (1,444 ) $ (274,778 ) $ 269,163
Adjustments to reconcile net income
   (loss) to net cash (used for) provided
   by operating activities

Depreciation and amortization 730
74,298
1,267
—
76,295
Deferred income taxes (1,230 ) 61,610
45
—
60,425
Net changes in working capital
   and other
(279,039 ) (153,604 ) 7,462
274,778
(150,403 )
Net cash (used for) provided by
   operating activities
(10,376 ) 258,526
7,330
—
255,480
Cash flows from investing activities
Acquisition of business —
(178,309 ) —
—
(178,309 )
Additions to equity investments —
(6,113 ) —
—
(6,113 )
Additions to property, plant and
   equipment
—
(295,859 ) (2,014 ) —
(297,873 )
Construction of assets pending
   sale-leaseback
—
(136 ) —
—
(136 )
Proceeds from disposition of assets —
2
60
—
62
Proceeds from repayment of loan
   to affiliate
—
—
167
—
167
Proceeds from sales and maturities of
   securities
209,785
—
—
—
209,785
Purchase of securities (114,881 ) —
—
—
(114,881 )
Settlements of derivative instruments —
(1,588 ) —
—
(1,588 )
Net cash provided by (used for)
   investing activities
94,904
(482,003 ) (1,787 ) —
(388,886 )
Cash flows from financing activities
Intercompany financing (214,927 ) 219,968
(5,041 ) —
—
Dividends paid (25,120 ) —
—
—
(25,120 )
Proceeds from exercise of stock options 2,656
—
—
—
2,656
Repurchase of common stock for treasury (13,283 ) —
—
—
(13,283 )
Windfall tax benefits from share-based
   payment arrangements
4,576
—
—
—
4,576
Net cash (used for) provided by
   financing activities
(246,098 ) 219,968
(5,041 ) —
(31,171 )
Net (decrease) increase in cash and
   cash equivalents
(161,570 ) (3,509 ) 502
—
(164,577 )
Cash and cash equivalents at beginning
   of period
753,881
6,973
29,224
—
790,078
Cash and cash equivalents at end of period $ 592,311
$ 3,464
$ 29,726
$ —
$ 625,501



	Westlake Chemical Corporation			100% Owned Guarantor Subsidiaries			OpCo (Less Than 100% Owned Guarantor Subsidiary)			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Statement of Operations
Net sales	$	—		$	1,026,282		$	392,008		$	208,313		$	(373,376	)	$	1,253,227
Cost of sales	—			831,675			227,015			202,110			(369,093		)	891,707
Gross profit	—			194,607			164,993			6,203			(4,283		)	361,520
Selling, general and administrative expenses	399			36,445			8,014			14,184			(4,283		)	54,759
(Loss) income from operations	(399		)	158,162			156,979			(7,981		)	—			306,761
Interest expense	(10,343		)	(2		)	(2,137		)	(39		)	3,035			(9,486		)
Other income (expense), net	2,138			(2,942		)	486			683			(3,035		)	(2,670		)
(Loss) income before income taxes	(8,604		)	155,218			155,328			(7,337		)	—			294,605
(Benefit from) provision for income taxes	(3,088		)	93,366			36,309			(2,138		)	—			124,449
Equity in net income of subsidiaries	173,273			113,157			—			5,862			(292,292		)	—
Net income (loss)	167,757			175,009			119,019			663			(292,292		)	170,156
Net income attributable to noncontrolling interests	—			—			—			2,399			—			2,399
Net income (loss) attributable to Westlake Chemical Corporation	$	167,757		$	175,009		$	119,019		$	(1,736	)	$	(292,292	)	$	167,757
Comprehensive income (loss) attributable to Westlake Chemical Corporation	$	131,456		$	175,137		$	119,019		$	(39,528	)	$	(254,628	)	$	131,456

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

Condensed Consolidating Financial Information for the Three Months Ended September 30, 2013



	Westlake Chemical Corporation			100% Owned Guarantor Subsidiaries			OpCo (Less Than 100% Owned Guarantor Subsidiary)			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Statement of Operations
Net sales	$	—		$	844,081		$	540,133		$	13,337		$	(393,386	)	$	1,004,165
Cost of sales	—			754,037			327,152			11,891			(393,386		)	699,694
Gross profit	—			90,044			212,981			1,446			—			304,471
Selling, general and administrative expenses	514			29,323			6,391			1,641			—			37,869
(Loss) income from operations	(514		)	60,721			206,590			(195		)	—			266,602
Interest expense	(3,292		)	(5		)	(2,295		)	—			2,295			(3,297		)
Other income (expense), net	3,585			(2,688		)	1,162			(51		)	(2,295		)	(287		)
(Loss) income before income taxes	(221		)	58,028			205,457			(246		)	—			263,018
(Benefit from) provision for income taxes	(70		)	19,973			72,876			(51		)	—			92,728
Equity in net income of subsidiaries	170,441			132,581			—			—			(303,022		)	—
Net income (loss) attributable to Westlake Chemical Corporation	$	170,290		$	170,636		$	132,581		$	(195	)	$	(303,022	)	$	170,290
Comprehensive income attributable to Westlake Chemical Corporation	$	171,095		$	170,764		$	132,581		$	351		$	(303,696	)	$	171,095

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2014



	Westlake Chemical Corporation			100% Owned Guarantor Subsidiaries			OpCo (Less Than 100% Owned Guarantor Subsidiary)			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Statement of Operations
Net sales	$	—		$	2,809,844		$	1,476,157		$	229,183		$	(1,235,705	)	$	3,279,479
Cost of sales	—			2,476,608			832,304			221,233			(1,205,167		)	2,324,978
Gross profit	—			333,236			643,853			7,950			(30,538		)	954,501
Selling, general and administrative expenses	1,474			123,050			21,957			16,954			(30,538		)	132,897
(Loss) income from operations	(1,474		)	210,186			621,896			(9,004		)	—			821,604
Interest expense	(29,032		)	(8		)	(9,833		)	(39		)	10,730			(28,182		)
Other income (expense), net	14,488			(1,729		)	3,135			(724		)	(10,730		)	4,440
(Loss) income before income taxes	(16,018		)	208,449			615,198			(9,767		)	—			797,862
(Benefit from) provision for income taxes	(5,686		)	109,920			198,461			(2,464		)	—			300,231
Equity in net income of subsidiaries	505,564			410,875			—			5,862			(922,301		)	—
Net income (loss)	495,232			509,404			416,737			(1,441		)	(922,301		)	497,631
Net income attributable to noncontrolling interests	—			—			—			2,399			—			2,399
Net income (loss) attributable to Westlake Chemical Corporation	$	495,232		$	509,404		$	416,737		$	(3,840	)	$	(922,301	)	$	495,232
Comprehensive income (loss) attributable to Westlake Chemical Corporation	$	461,415		$	509,787		$	416,737		$	(41,722	)	$	(884,802	)	$	461,415

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2013



	Westlake Chemical Corporation			100% Owned Guarantor Subsidiaries			OpCo (Less Than 100% Owned Guarantor Subsidiary)			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Statement of Operations
Net sales	$	—		$	2,407,341		$	1,565,809		$	37,561		$	(1,202,852	)	$	2,807,859
Cost of sales	—			2,247,338			924,663			32,943			(1,202,852		)	2,002,092
Gross profit	—			160,003			641,146			4,618			—			805,767
Selling, general and administrative expenses	1,576			84,152			19,326			4,829			—			109,883
(Loss) income from operations	(1,576		)	75,851			621,820			(211		)	—			695,884
Interest expense	(14,882		)	(39		)	(4,893		)	—			4,893			(14,921		)
Other income (expense), net	7,490			(4,002		)	6,422			(1,880		)	(4,893		)	3,137
(Loss) income before income taxes	(8,968		)	71,810			623,349			(2,091		)	—			684,100
(Benefit from) provision for income taxes	(3,202		)	27,292			221,009			(452		)	—			244,647
Equity in net income of subsidiaries	445,219			402,340			—			—			(847,559		)	—
Net income (loss) attributable to Westlake Chemical Corporation	$	439,453		$	446,858		$	402,340		$	(1,639	)	$	(847,559	)	$	439,453
Comprehensive income (loss) attributable to Westlake Chemical Corporation	$	439,372		$	447,490		$	402,340		$	(2,483	)	$	(847,347	)	$	439,372

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2014



	Westlake Chemical Corporation			100% Owned Guarantor Subsidiaries				OpCo (Less Than 100% Owned Guarantor Subsidiary)			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Statement of Cash Flows
Cash flows from operating activities
Net income (loss)	$	495,232		$	509,404			$	416,737		$	(1,441	)	$	(922,301	)	$	497,631
Adjustments to reconcile net income (loss) to net cash (used for) provided by operating activities
Depreciation and amortization	1,172			82,597				58,501			7,296			—			149,566
Deferred income taxes	(418		)	26,991			��	8,267			(381		)	—			34,459
Net changes in working capital and other	(509,862		)	(919,521		)		1,641			599,909			922,301			94,468
Net cash (used for) provided by operating activities	(13,876		)	(300,529		)		485,146			605,383			—			776,124
Cash flows from investing activities
Acquisition of business, net of cash acquired	—			—				—			(611,087		)	—			(611,087		)
Additions to property, plant and equipment	—			(160,147		)		(144,348		)	(6,688		)	—			(311,183		)
Proceeds from disposition of assets	—			144				—			1			—			145
Proceeds from repayment of loan acquired	—			—				—			45,923			—			45,923
Proceeds from sales and maturities of securities	342,045			—				—			—			—			342,045
Purchase of securities	(117,332		)	—				—			—			—			(117,332		)
Settlements of derivative instruments	—			(556		)		(133		)	—			—			(689		)
Net cash provided by (used for) investing activities	224,713			(160,559		)		(144,481		)	(571,851		)	—			(652,178		)
Cash flows from financing activities
Intercompany financing	75,104			(143,325		)		62,221			6,000			—			—
Net distributions prior to WLKP initial public offering	—			448,101				(448,101		)	—			—			—
Capitalized debt issuance costs	(1,167		)	—				—			—			—			(1,167		)
Dividends paid	(55,690		)	151,729				(151,729		)	—			—			(55,690		)
Net proceeds from issuance of WLKP common units	—			—				—			286,088			—			286,088
Purchase of limited partner interests	—			—				286,088			(286,088		)	—			—
Proceeds from exercise of stock options	5,502			—				—			—			—			5,502
Repurchase of common stock for treasury	(9,495		)	—				—			—			—			(9,495		)
Windfall tax benefits from share-based payment arrangements	6,670			—				—			—			—			6,670
Net cash provided by (used for) financing activities	20,924			456,505				(251,521		)	6,000			—			231,908

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)



	Westlake Chemical Corporation		100% Owned Guarantor Subsidiaries			OpCo (Less Than 100% Owned Guarantor Subsidiary)		Non- Guarantor Subsidiaries			Eliminations		Consolidated
Effect of exchange rate changes on cash and cash equivalents	—		—			—		(3,687		)	—		(3,687		)
Net increase (decrease) in cash and cash equivalents	231,761		(4,583		)	89,144		35,845			—		352,167
Cash and cash equivalents at beginning of period	420,948		6,227			—		34,126			—		461,301
Cash and cash equivalents at end of period	$	652,709	$	1,644		$	89,144	$	69,971		$	—	$	813,468

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)

Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2013



	Westlake Chemical Corporation			100% Owned Guarantor Subsidiaries			OpCo (Less Than 100% Owned Guarantor Subsidiary)			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Statement of Cash Flows
Cash flows from operating activities
Net income (loss)	$	439,453		$	446,858		$	402,340		$	(1,639	)	$	(847,559	)	$	439,453
Adjustments to reconcile net income (loss) to net cash (used for) provided by operating activities
Depreciation and amortization	1,094			59,893			54,539			1,861			—			117,387
Deferred income taxes	(1,102		)	57,279			27,253			13			—			83,443
Net changes in working capital and other	(458,336		)	(421,066		)	(68,604		)	7,664			847,559			(92,783		)
Net cash (used for) provided by operating activities	(18,891		)	142,964			415,528			7,899			—			547,500
Cash flows from investing activities
Acquisition of business	—			(178,309		)	—			—			—			(178,309		)
Additions to equity investments	—			(23,338		)	—			—			—			(23,338		)
Additions to property, plant and equipment	—			(337,158		)	(158,869		)	(2,263		)	—			(498,290		)
Construction of assets pending sale-leaseback	—			(136		)	—			—			—			(136		)
Proceeds from disposition of assets	—			6			—			72			—			78
Proceeds from repayment of loan to affiliate	—			—			—			167			—			167
Proceeds from sales and maturities of securities	239,764			—			—			—			—			239,764
Purchase of securities	(232,286		)	—			—			—			—			(232,286		)
Settlements of derivative instruments	—			—			(2,297		)	—			—			(2,297		)
Net cash provided by (used for) investing activities	7,478			(538,935		)	(161,166		)	(2,024		)	—			(694,647		)
Cash flows from financing activities
Intercompany financing	(130,832		)	(28,499		)	167,629			(8,298		)	—			—
Net distributions prior to WLKP initial public offering	—			421,991			(421,991		)	—			—			—
Dividends paid	(40,204		)	—			—			—			—			(40,204		)
Proceeds from exercise of stock options	3,182			—			—			—			—			3,182
Repurchase of common stock for treasury	(19,409		)	—			—			—			—			(19,409		)
Windfall tax benefits from share-based payment arrangements	5,056			—			—			—			—			5,056
Net cash (used for) provided by financing activities	(182,207		)	393,492			(254,362		)	(8,298		)	—			(51,375		)

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

(in thousands of dollars, except share amounts and per share data)



	Westlake Chemical Corporation			100% Owned Guarantor Subsidiaries			OpCo (Less Than 100% Owned Guarantor Subsidiary)		Non- Guarantor Subsidiaries			Eliminations		Consolidated
Net decrease in cash and cash equivalents	(193,620		)	(2,479		)	—		(2,423		)	—		(198,522		)
Cash and cash equivalents at beginning of period	753,881			6,973			—		29,224			—		790,078
Cash and cash equivalents at end of period	$	560,261		$	4,494		$	—	$	26,801		$	—	$	591,556

Table of Contents


Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis should be read in conjunction with information contained in the accompanying unaudited consolidated interim financial statements of Westlake Chemical Corporation and the notes thereto and the consolidated financial statements and notes thereto of Westlake Chemical Corporation included in Westlake Chemical Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (the "2013 Form 10-K"). The following discussion contains forward-looking statements. Please read "Forward-Looking Statements" for a discussion of limitations inherent in such statements.

We are a vertically integrated manufacturer and marketer of basic chemicals, vinyls, polymers and fabricated building products. Our two principal operating segments are Olefins and Vinyls. We use the majority of our internally-produced basic chemicals to produce higher value-added chemicals and building products.

Since 2009 and continuing through the ~~second~~third quarter of 2014, a cost advantage for ethane-based ethylene producers over naphtha-based ethylene producers has allowed a strong export market for ethylene derivatives and higher margins for North American chemical producers, including Westlake. Increased global demand for polyethylene in recent years in particular has resulted in improved operating margins and cash flow for our Olefins segment. Crude oil prices have fallen toward the end of the third quarter of 2014, narrowing such cost advantage.

Continued slow recovery in the U.S. construction markets and budgetary constraints in municipal spending have contributed to lower domestic demand for our vinyls products. However, since late 2010, the polyvinyl chloride ("PVC") industry has experienced an increase in PVC resin export demand, driven largely by more competitive feedstock and energy cost positions in North America. As a consequence, domestic PVC resin industry operating rates have improved since 2010, largely due to higher PVC resin export shipments. In the fourth quarter of 2013, we started up our new world scale Geismar, Louisiana chlor-alkali plant. In April 2014, we completed the ethane feedstock conversion and ethylene expansion ~~and conversion of~~project at our Calvert City, Kentucky ethylene ~~plant to ethane feedstock~~plant. In July 2014, we closed the acquisition of German-based Vinnolit Holdings GmbH and its subsidiary companies ("Vinnolit") (see further discussion in "Recent Developments" below). The completion of these two projects, as well as the acquisition of Vinnolit, is expected to improve the profitability of our Vinyls segment.

The U.S. and global economic environment appears to be slowly improving, but depending on the performance of ~~both economies~~the global economy in the remainder of 2014 and beyond, could still have ~~a negative effect~~an impact on our financial condition, results of operations or cash flows.

Recent Developments

In March 2014, we formed Westlake Chemical Partners LP ("WLKP") to operate, acquire and develop ethylene production facilities and related assets. On August 4, 2014, WLKP closed its initial public offering of 12,937,500 common units at a price of $24.00 per unit, which included 1,687,500 units purchased by the underwriters through an over-allotment option. Net proceeds to WLKP from the sale of the units was approximately ~~$286.3~~$286.1 million, net of underwriting discounts, structuring fees and estimated offering expenses of approximately ~~$24.2~~$24.4 million. At the consummation of this offering, WLKP's assets consist of a 10.6% limited partner interest in Westlake Chemical OpCo LP ("OpCo"), as well as the general partner interest in OpCo. We retained an 89.4% limited partner interest in OpCo and a significant interest in WLKP. OpCo used the net proceeds from the purchase of its limited partner interest to establish a cash reserve of approximately $55.4 million for turnaround expenditures, to reimburse us approximately ~~$155.7~~$151.7 million for capital expenditures incurred with respect to certain of the assets contributed to OpCo and to repay intercompany debt of approximately ~~$75.1~~$78.9 million. The initial public offering represented the sale of a 47.8% ~~interest~~of the common and subordinated units in WLKP.

~~In May~~On July 31, 2014, we ~~announced that we had entered into a definitive agreement to acquire German-based~~acquired Vinnolit ~~Holdings GmbH and its subsidiary companies ("Vinnolit")~~ from several entities associated with Advent International Corporation. Vinnolit is headquartered in Ismaning, Germany and is an integrated global leader in specialty PVC resins, with a combined annual capacity of 1.7 billion pounds of PVC, including specialty paste and suspension grades, 1.5 billion pounds of vinyl chloride monomer ("VCM") and 1.0 billion pounds of caustic soda. ~~The purchase price of approximately €490.0 million was financed using existing Westlake cash and credit facilities. This transaction closed on July 31, 2014.~~

In April 2014, we completed the previously announced feedstock conversion and ethylene expansion project at our Calvert City ethylene plant. With the completion of this project, our Calvert City ethylene plant now utilizes cost-advantaged ethane feedstock and increased its capacity by approximately 180 million pounds annually. This expansion and feedstock conversion project is expected to enhance our vinyl chain integration and leverage low cost ethane being developed in the Marcellus shale area. The ethylene plant and other production facilities at our Calvert City complex were shut down for approximately 19 days (5 days during the second quarter of 2014) as a result of the feedstock conversion and ethylene expansion project and other planned maintenance turnaround activities. Income from operations for the first quarter of 2014 was negatively impacted by the lost sales, lower production rates, unabsorbed fixed manufacturing costs and other costs

~~Table of Contents~~

~~associated with the feedstock conversion and ethylene expansion project and maintenance turnaround at the Calvert City complex.~~

2531

Table of Contents

Results of Operations

Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013

(dollars in thousands, except per share data)
Net external sales
Olefins
Polyethylene $ 475,503
$ 413,693
$ 962,647
$ 834,461
Styrene, feedstock and other 223,550
209,648
459,204
371,725
Total Olefins 699,053
623,341
1,421,851
1,206,186
Vinyls
PVC, caustic soda and other 168,762
205,104
359,289
400,350
Building products 130,761
110,602
245,112
197,158
Total Vinyls 299,523
315,706
604,401
597,508
Total $ 998,576
$ 939,047
$ 2,026,252
$ 1,803,694

Income (loss) from operations
Olefins $ 238,657
$ 187,661
$ 510,990
$ 348,719
Vinyls 38,129
52,906
17,015
96,569
Corporate and other (9,998 ) (5,340 ) (13,162 ) (16,006 )
Total income from operations 266,788
235,227
514,843
429,282
Interest expense (9,539 ) (5,343 ) (18,696 ) (11,624 )
Other income (expense), net 4,601
(95 ) 7,110
3,424
Provision for income taxes 92,407
83,973
175,782
151,919
Net income $ 169,443
$ 145,816
$ 327,475
$ 269,163
Diluted earnings per share ⁽¹⁾
$ 1.26
$ 1.09
$ 2.44
$ 2.01
_____________
(1) Per share data for the three and six months ended June 30, 2013 has been restated to reflect the effect of a two-for-one
          stock split on March 18, 2014. See Note 1 to the unaudited consolidated financial statements within this Quarterly
          Report on Form 10-Q for additional information.

Three Months Ended June 30, 2014 Six Months Ended June 30, 2014

Average
Sales Price
Volume
Average
Sales Price
Volume
Product sales price and volume percentage change
   from prior year period

Olefins +7.4 % +4.8 % +9.2 % +8.7 %
Vinyls +1.0 % -6.2 % +0.2 % +0.9 %
Company average +5.2 % +1.1 % +6.2 % +6.1 %

Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
Average industry prices ⁽¹⁾

Ethane (cents/lb) 9.8
9.2
10.6
8.9
Propane (cents/lb) 25.2
21.6
28.0
21.0
Ethylene (cents/lb) ⁽²⁾
55.5
58.5
55.3
60.9
Polyethylene (cents/lb) ⁽³⁾
109.0
100.0
108.3
98.7
Styrene (cents/lb) ⁽⁴⁾
82.2
81.8
84.5
83.9
Caustic soda ($/short ton) ⁽⁵⁾
595.0
625.8
587.1
614.2
Chlorine ($/short ton) ⁽⁶⁾
232.5
255.0
234.6
255.0
PVC (cents/lb) ⁽⁷⁾
69.5
62.2
68.0
60.7

~~_____________~~



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013

	(dollars in thousands, except per share data)
Net external sales
Olefins
Polyethylene	$	498,450		$	460,105		$	1,461,097		$	1,294,566
Styrene, feedstock and other	204,647			219,234			663,851			590,959
Total Olefins	703,097			679,339			2,124,948			1,885,525
Vinyls
PVC, caustic soda and other	416,771			212,041			776,060			612,391
Building products	133,359			112,785			378,471			309,943
Total Vinyls	550,130			324,826			1,154,531			922,334
Total	$	1,253,227		$	1,004,165		$	3,279,479		$	2,807,859

Income (loss) from operations
Olefins	$	259,277		$	237,239		$	770,267		$	585,958
Vinyls	59,445			39,554			76,460			136,123
Corporate and other	(11,961		)	(10,191		)	(25,123		)	(26,197		)
Total income from operations	306,761			266,602			821,604			695,884
Interest expense	(9,486		)	(3,297		)	(28,182		)	(14,921		)
Other (expense) income, net	(2,670		)	(287		)	4,440			3,137
Provision for income taxes	124,449			92,728			300,231			244,647
Net income	170,156			170,290			497,631			439,453
Net income attributable to noncontrolling interests	2,399			—			2,399			—
Net income attributable to Westlake Chemical Corporation	$	167,757		$	170,290		$	495,232		$	439,453
Diluted earnings per share ⁽¹⁾	$	1.25		$	1.27		$	3.69		$	3.27
_____________
(1) Per share data for the three and nine months ended September 30, 2013 have been restated to reflect the effect of a two-for-one stock split on March 18, 2014. See Note 1 to the unaudited consolidated financial statements within this Quarterly Report on Form 10-Q for additional information.

	Three Months Ended September 30, 2014						Nine Months Ended September 30, 2014
	Average Sales Price			Volume			Average Sales Price			Volume
Product sales price and volume percentage change from prior year period
Olefins	+10.7		%	-7.2		%	+9.8		%	+2.9		%
Vinyls	+1.6		%	+67.8		%	-0.2		%	+25.3		%
Company average	+7.8		%	+17.1		%	+6.6		%	+10.2		%

2632

Table of Contents



	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Average industry prices ⁽¹⁾
Ethane (cents/lb)	7.9	8.4	9.7	8.7
Propane (cents/lb)	24.6	24.4	26.9	22.2
Ethylene (cents/lb) ⁽²⁾	66.6	54.3	59.1	58.7
Polyethylene (cents/lb) ⁽³⁾	110.0	101.7	108.9	99.7
Styrene (cents/lb) ⁽⁴⁾	85.8	83.2	85.0	83.6
Caustic soda ($/short ton) ⁽⁵⁾	588.3	605.8	587.5	611.4
Chlorine ($/short ton) ⁽⁶⁾	232.5	248.3	233.9	252.8
PVC (cents/lb) ⁽⁷⁾	70.2	61.5	68.7	60.9

_____________


(1)	Industry pricing data was obtained from IHS Chemical. We have not independently verified the data.


(2)	Represents average North American spot prices of ethylene over the period as reported by IHS Chemical.


(3)	Represents average North American contract prices of polyethylene low density film over the period as reported by IHS Chemical.


(4)	Represents average North American contract prices of styrene over the period as reported by IHS Chemical.


(5)	Represents average North American undiscounted contract prices of caustic soda over the period as reported by IHS Chemical.


(6)	Represents average North American contract prices of chlorine (into chemicals) over the period as reported by IHS Chemical.


(7)	Represents average North American contract prices of PVC over the period as reported by IHS Chemical.

Summary

For the quarter ended ~~June~~September 30, 2014, net income attributable to Westlake Chemical Corporation was ~~$169.4~~$167.8 million,, or $~~1.26~~1.25 per diluted share, on net sales of $~~998.6~~1,253.2 million. This represents ~~an increase~~a decrease in net income attributable to Westlake Chemical Corporation of ~~$23.6~~$2.5 million,, or $~~0.17~~0.02 per diluted share, compared to the quarter ended ~~June~~September 30, 2013 net income attributable to Westlake Chemical Corporation of ~~$145.8~~$170.3 million,, or $~~1.09~~1.27 per diluted share, on net sales of $1,004.2 million. Net income for the third quarter of 2014 was negatively impacted by (1) WLKP formation and initial public offering costs and Vinnolit acquisition and associated costs of approximately $21.6 million, after tax; (2) a third quarter 2014 elevated effective tax rate of 42.2% as a result of the recognition of the tax impact of current changes in state tax rates and other discrete tax items, which reduced net income by $16.2 million; and (3) unplanned outages at our Calvert City and Geismar facilities in the ~~$939.0~~third quarter of 2014, which resulted in maintenance and other costs of $7.1 million, after tax. The increase in the effective tax rate was primarily attributable to discrete items totaling $16.2 million which increased the third quarter of 2014 tax provision, comprising $13.7 million related to state apportionment rate changes, $2.1 million related to goodwill on a pipeline contributed to WLKP and $0.4 million related to other miscellaneous items. We estimate the 2014 annual tax rate on ordinary income will be approximately 35.6%. Net sales for the ~~second~~third quarter of 2014 increased by ~~$59.6~~$249.0 million compared to net sales for the third quarter of 2013, mainly attributable to sales contributed by Vinnolit, which we acquired in July 2014, higher sales prices for our major Olefins products and PVC resin and higher sales volumes for PVC resin, caustic soda and ethylene. The increase in net sales was partially offset by lower sales volumes for styrene and ethylene co-products. Income from operations was ~~second~~$306.8 million for the third quarter of 2014 as compared to $266.6 million for the third quarter of 2013~~, mainly attributable~~. Income from operations for the third quarter of 2014 benefited primarily from improved olefins and vinyls integrated product margins, predominantly due to higher sales prices for most of our major products and lower overall feedstock costs as compared to the prior year period. Income from operations for the third quarter of 2014 was negatively impacted by lost sales, lower production rates, unabsorbed fixed manufacturing costs and other costs associated with the unplanned outages at our Calvert City and Geismar complexes, as well as the negative impact of WLKP formation and initial public offering costs and the Vinnolit acquisition-related costs, including the effect of selling higher cost inventory recorded at fair value.

For the nine months ended September 30, 2014, net income attributable to Westlake Chemical Corporation was $495.2 million, or $3.69 per diluted share, on net sales of $3,279.5 million. This represents an increase in net income attributable to Westlake Chemical Corporation of $55.7 million, or $0.42 per diluted share, from the nine months ended September 30, 2013 net income attributable to Westlake Chemical Corporation of $439.5 million, or $3.27 per diluted share, on net sales of $2,807.9 million. Net income for the nine months ended September 30, 2014 was negatively impacted by WLKP formation and initial public offering costs and Vinnolit acquisition and associated costs of approximately $24.5 million, after tax, and the

Table of Contents

discrete tax items which increased the third quarter tax provision by approximately $16.2 million. Net sales for the nine months ended September 30, 2014 increased by $471.6 million compared to the prior year period primarily due to sales contributed by Vinnolit and our specialty PVC pipe business, which we acquired in July 2014 and May 2013, respectively, higher sales prices and sales volumes for most of our major Olefins products and higher PVC resin sales prices, partially offset by lower ethylene co-products and styrene sales volumes. Income from operations was $821.6 million for the nine months ended September 30, 2014 as compared to $695.9 million for the nine months ended September 30, 2013, an increase mainly attributable to improved olefins integrated product margins, primarily as a result of the increased ethylene production at our Lake Charles, Louisiana complex after the first quarter 2013 completion of the Petro 2 ethylene unit expansion and its conversion to 100% ethane feedstock capability. The increase in income from operations for the nine months ended September 30, 2014 was partially offset by lost sales, lower production rates, unabsorbed fixed manufacturing costs and other costs associated with several planned and unplanned outages at our chemical complexes.

RESULTS OF OPERATIONS

Third Quarter 2014 Compared with Third Quarter 2013

Net Sales. Net sales increased by $249.0 million, or 24.8%, to $1,253.2 million in the third quarter of 2014 from $1,004.2 million in the third quarter of 2013, primarily attributable to sales contributed by Vinnolit, higher sales prices for our major Olefins products and PVC resin and higher sales volumes for ~~polyethylene, styrene~~PVC resin, caustic soda and ~~caustic soda,~~ethylene, partially offset by lower sales volumes for ~~PVC resin~~styrene and ethylene co-products. Ethylene co-products sales volumes were lower for the ~~second~~third quarter of 2014 primarily due to the change to ethane feedstock currently utilized at our Calvert City ethylene plant following the completion of the feedstock conversion and ethylene expansion project. ~~Income from operations was~~Average sales prices for the ~~$266.8 million~~third quarter of 2014 increased by 7.8% as compared to the third quarter of 2013. Overall sales volumes increased by 17.1% as compared to the third quarter of 2013.

Gross Profit. Gross profit margin percentage decreased to 28.8% for the ~~second~~third quarter of 2014 from 30.3% for the third quarter of 2013. Our raw material cost in both segments normally tracks industry prices, which experienced a decrease of 6.0% for ethane as compared to the third quarter of 2013. In addition, our overall feedstock costs were also lower in the third quarter of 2014 due to the cost-advantaged ethane feedstock currently utilized at our Calvert City ethylene plant, as compared to the propane feedstock utilized during the prior year period. Sales prices increased an average of 7.8% for the third quarter of 2014 as compared to ~~$235.2 million~~ ~~for~~ the ~~second~~third quarter of 2013. ~~Income from operations~~These benefits to gross profit margin for the ~~second~~third quarter of 2014 ~~benefited primarily from improved olefins integrated product margins, as higher sales prices~~were more than offset the increase in feedstock and energy costs, and higher olefins sales volumes. The second quarter 2014 income from operations was negatively impacted by higher cost inventory that was produced from propane feedstock in the first quarter of 2014 that flowed through cost of sales in the second quarter of 2014, costs associated with the first quarter 2014 maintenance turnaround and other activities at our Calvert City complex that carried over into the second quarter of 2014 and lower PVC resin sales volumes in the second quarter of 2014 as compared to the second quarter of 2013. In addition, the second quarter of 2014 was negatively impacted by an unplanned outage at one of our ethylene units in Lake Charles, Louisiana.

~~For the~~ ~~six months ended June 30, 2014, net income was~~ ~~$327.5 million, or~~ ~~$2.44~~ ~~per diluted share, on net sales of~~ ~~$2,026.3 million. This represents an increase in net income of~~ ~~$58.3 million, or~~ ~~$0.43~~ ~~per diluted share, from the~~ ~~six months ended June 30, 2013~~ ~~net income of~~ ~~$269.2 million, or~~ ~~$2.01~~ ~~per diluted share, on net sales of~~ ~~$1,803.7 million. Net sales for the~~ ~~six months ended June 30, 2014~~ ~~increased by~~ ~~$222.6 million~~ compared to the prior year period mainly due to higher sales prices and sales volumes for most of our major Olefins products and sales contributed by our specialty PVC pipe business, which we acquired in May 2013, partially offset by lower ethylene co-products, PVC resin and styrene sales volumes. Income from operations was ~~$514.8 million~~ ~~for the~~ ~~six months ended June 30, 2014~~ ~~as compared to~~ ~~$429.3 million~~ ~~for the~~ ~~six months ended June 30, 2013, an increase primarily attributable to improved olefins integrated product margins and higher olefins sales volumes. The increase in income from operations for the~~ ~~six months ended June 30, 2014~~ ~~was partially offset~~ by the negative impact of lost sales, lower production rates, unabsorbed fixed manufacturing costs and other costs associated with the ~~maintenance turnaround~~unplanned outages at our Calvert City ~~complex~~ and ~~our Calvert City ethylene plant’s feedstock conversion and expansion project during the first quarter of 2014.~~

~~RESULTS OF OPERATIONS~~

~~Second Quarter 2014~~ ~~Compared with~~ ~~Second Quarter 2013~~

~~Net Sales. Net sales increased by~~ ~~$59.6 million, or~~ ~~6.3%, to~~ ~~$998.6 million~~ ~~in the~~ ~~second quarter of 2014~~ ~~from~~ ~~$939.0 million~~ ~~in the~~ ~~second quarter of 2013~~, primarily attributable to higher sales prices for most of our major Olefins products and higher sales volumes for polyethylene, styrene and caustic soda, partially offset by lower sales volumes for PVC resin and ethylene co-products. Average sales prices for the ~~second quarter of 2014~~ ~~increased by~~ ~~5.2%~~ ~~as compared to the~~ ~~second quarter of 2013. Overall sales volumes increased by~~ ~~1.1%~~ ~~as compared to the~~ ~~second quarter of 2013~~.

~~Gross Profit. Gross profit margin percentage increased to~~ ~~30.6%~~ ~~for the~~ ~~second quarter of 2014~~ ~~from~~ ~~29.1%~~ ~~for the~~ ~~second quarter of 2013~~, mainly due to improved olefins integrated product margins as an increase in sales prices outpaced increases in feedstock and energy costs. Our raw material cost in both segments normally tracks industry prices, which experienced an increase of 6.5% for ethane as compared to the ~~second quarter of 2013. Sales prices increased an average of~~ ~~5.2%~~ ~~for the~~ ~~second quarter of 2014~~ ~~as compared to the~~ ~~second quarter of 2013. The improvement in gross profit margin for the~~ ~~second quarter of 2014~~ ~~was partially offset by~~Geismar complexes, the negative impact of selling higher cost Vinnolit inventory ~~that was produced from propane~~

~~Table of Contents~~

~~feedstock in the first quarter of 2014, costs associated with the first quarter 2014 maintenance turnaround~~recorded at fair value and other activities at our Calvert City complex that carried over into the second quarter of 2014 and the lost production resulting from the maintenance turnaround activities that extended into the second quarter of 2014, which resulted in lower PVC resin sales volumes in the second quarter of 2014 as compared to the prior year period. In addition, the second quarter of 2014 was negatively impacted by an unplanned outage at one of our ethylene units in Lake Charles.higher energy costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the ~~second~~third quarter of 2014 of $~~39.2~~54.8 million increased ~~marginally~~ by ~~$0.9~~$16.9 million as compared to the ~~second~~third quarter of 2013,~~, as~~ mainly due to general and administrative costs incurred by Vinnolit for the period from July 31, 2014 to September 30, 2014 and an increase in consulting and professional fees ~~were mostly offset by a decrease in~~related to the ~~provision for doubtful accounts.~~formation and initial public offering of WLKP and the acquisition of Vinnolit.

Interest Expense. Interest expense increased by $~~4.2~~6.2 million to $9.5 million in the ~~second~~third quarter of 2014 from $~~5.3~~3.3 million in the ~~second~~third quarter of 2013 largely as a result of decreased capitalized interest on major capital projects as compared to the prior year period. Debt balances remained relatively unchanged from the prior year period.

Other ~~Income (Expense),~~Expense, Net. Other ~~income (expense),~~expense, net ~~was net income of~~increased by $2.4 million to $~~4.6~~2.7 million in the ~~second~~third quarter of 2014 ~~compared to net expense of~~from $~~0.1~~0.3 million in the ~~second~~third quarter of 2013, mainly due to higher losses on foreign exchange, partially offset by higher income from our equity method ~~investments, higher gain from sales of securities and lower losses on foreign exchange.~~investments.

Income Taxes. The effective income tax rate was ~~35.3%~~42.2% for the ~~second~~third quarter of 2014. The effective income tax rate for the ~~second~~third quarter of 2014 was above the U.S. federal statutory rate of 35.0% primarily due to state income taxes, partially offset by the domestic manufacturing deduction. The effective income tax rate was 35.3% for the third quarter of 2013. The effective income tax rate for the third quarter of 2013 was above the U.S. federal statutory rate of 35.0% primarily due to state income taxes, mostly offset by the domestic manufacturing deduction. ~~The effective income tax rate was~~ ~~36.5%~~ ~~for the~~ ~~second quarter of 2013. The effective income tax rate for the~~ ~~second quarter of 2013~~ ~~was above the U.S. federal statutory rate of~~ ~~35.0%~~ ~~primarily due to state income taxes, partially offset by the domestic manufacturing deduction.~~

Olefins Segment

Net Sales. Net sales increased by $~~75.8~~23.8 million, or ~~12.2%~~3.5%, to $~~699.1~~703.1 million in the ~~second~~third quarter of 2014 from $~~623.3~~679.3 million in the ~~second~~third quarter of 2013, ~~predominantly~~primarily due to higher sales prices for ~~most of~~ our major products and higher sales volumes for ~~polyethylene and~~ethylene, partially offset by lower sales volumes for styrene, as compared to the prior year period. Average sales prices for the Olefins segment increased by ~~7.4%~~10.7% in the ~~second~~third quarter of 2014 as compared to the ~~second~~third quarter of 2013. Average sales volumes for the Olefins segment ~~increased~~decreased by ~~4.8%~~7.2% in the ~~second~~third quarter of 2014 as compared to the ~~second~~third quarter of 2013.

Table of Contents

Income from Operations. Income from operations increased by $~~51.0~~22.1 million, or ~~27.2%~~9.3%, to $~~238.7~~259.3 million in the ~~second~~third quarter of 2014 from $~~187.7~~237.2 million in the ~~second~~third quarter of 2013. This increase was mainly attributable to higher olefins integrated product margins in the ~~second~~third quarter of 2014 as compared to the prior year period, primarily as ~~the increase in~~a result of higher sales prices ~~outpaced increases in feedstock~~ and ~~energy~~lower ethane costs. In addition, second quarter 2014 income from operations benefited from higher polyethylene and styrene sales volumes as compared to the second quarter of 2013. Second quarter 2014 income from operations was negatively impacted by an unplanned outage at one of our ethylene units in Lake Charles. Trading activity in the ~~second~~third quarter of 2014 resulted in a ~~gain~~loss of $~~0.2~~6.9 million as compared to a gain of $~~9.4~~4.9 million in the ~~second~~third quarter of 2013.

Vinyls Segment

Net Sales. Net sales ~~decreased~~increased by $~~16.2~~225.3 million, or ~~5.1%~~69.4%, to $~~299.5~~550.1 million in the ~~second~~third quarter of 2014 from $~~315.7~~324.8 million in the ~~second~~third quarter of 2013. This ~~decrease~~increase was mainly attributable to sales contributed by Vinnolit, higher sales prices for PVC resin and higher sales volumes for PVC resin and caustic soda. The increase in net sales in the third quarter of 2014 was partially offset by the lower ethylene co-products volumes produced, and consequently sold, as a result of the change in feedstock utilized at our Calvert City ethylene plant from propane to ethane, following the completion of the feedstock conversion project. ~~In addition, PVC resin sales volumes were lower in the~~ ~~second quarter of 2014~~ ~~as compared to the prior year period.~~ Average sales prices for the Vinyls segment increased by ~~1.0%~~1.6% in the ~~second~~third quarter of 2014 as compared to the ~~second~~third quarter of 2013. Average sales volumes for the Vinyls segment ~~decreased~~increased by ~~6.2%~~67.8% in the ~~second~~third quarter of 2014 as compared to the ~~second~~third quarter of 2013.

Income from Operations. Income from operations ~~decreased~~increased by $~~14.8~~19.8 million, or ~~28.0%~~50.0%, to $~~38.1~~59.4 million in the ~~second~~third quarter of 2014 from $~~52.9~~39.6 million in the ~~second~~third quarter of 2013. This increase was mainly driven by higher vinyls integrated product margins in the third quarter of 2014 primarily as a result of the cost-advantaged ethane feedstock currently utilized at our Calvert City ethylene plant, as compared to the propane feedstock utilized during the prior year period. The ~~second~~third quarter 2014 income from operations was negatively impacted by ~~higher cost inventory that was produced from propane feedstock in the first quarter of 2014 that flowed through cost of~~lost sales, ~~in the second quarter of 2014~~lower production rates, unabsorbed fixed manufacturing costs and other costs associated with the ~~first quarter 2014 maintenance turnaround and other activities~~unplanned outages at our Calvert City ~~complex that carried over into~~and Geismar complexes and the ~~second quarter~~effect of 2014. In addition, second quarter 2014 income from operations was negatively impacted by lower PVC resin sales volumes primarily caused by lost production resulting from the first quarter 2014 maintenance turnaround activitiesselling higher cost Vinnolit inventory recorded at ~~our Calvert City complex that extended into the second quarter of 2014.~~fair value.

~~Table of Contents~~

~~Six~~Nine Months Ended ~~June~~September 30, 2014 Compared with ~~Six~~Nine Months Ended ~~June~~September 30, 2013

Net Sales. Net sales increased by $~~222.6~~471.6 million, or ~~12.3%~~16.8%, to $~~2,026.3~~3,279.5 million for the ~~six~~nine months ended ~~June~~September 30, 2014 from $~~1,803.7~~2,807.9 million for the ~~six~~nine months ended ~~June~~September 30, 2013, primarily attributable to sales contributed by Vinnolit and our specialty PVC pipe business, higher sales prices and sales volumes for most of our major Olefins products and higher PVC resin sales ~~contributed by our specialty PVC pipe business,~~prices, partially offset by lower ethylene co-products ~~PVC resin~~ and styrene sales volumes. Ethylene co-products sales volumes were lower for the ~~six~~nine months ended ~~June~~September 30, 2014, as compared to the ~~six~~nine months ended ~~June~~September 30, 2013, primarily due to the planned ~~shut down~~shut-down of our Calvert City ethylene plant as a result of the feedstock conversion and ethylene expansion project, and the change to ethane feedstock currently utilized at our Calvert City ethylene plant following the completion of ~~the feedstock conversion~~such project. Average sales prices for the ~~six~~nine months ended ~~June~~September 30, 2014 increased by ~~6.2%~~6.6% as compared to the ~~six~~nine months ended ~~June~~September 30, 2013. Overall sales volumes for the ~~six~~nine months ended ~~June~~September 30, 2014 increased by ~~6.1%~~10.2% as compared to the ~~six~~nine months ended ~~June~~September 30, 2013.

Gross Profit. Gross profit margin percentage of ~~29.3%~~29.1% for the ~~six~~nine months ended ~~June~~September 30, 2014 increased from the ~~27.8%~~28.7% gross profit margin percentage for the ~~six~~nine months ended ~~June~~September 30, 2013. The improvement in gross profit margin percentage was ~~predominantly~~mainly due to the improved olefins integrated product margins, primarily as a result of the increased ethylene production at our Lake Charles complex after the first quarter 2013 completion of the Petro 2 ethylene unit expansion and its conversion to 100% ethane feedstock capability. In addition, olefins integrated product margins for the ~~six~~nine months ended ~~June~~September 30, 2014 benefited from an increase in sales prices that outpaced increases in feedstock and energy costs as compared to the prior year period. Our raw material cost in both segments normally tracks industry prices, which experienced an increase of ~~19.1%~~11.5% for ethane and an increase of ~~33.3%~~21.2% for propane as compared to the ~~six~~nine months ended ~~June~~September 30, 2013. Sales prices increased an average of ~~6.2%~~6.6% for the ~~six~~nine months ended ~~June~~September 30, 2014 as compared to the prior year period. The gross profit margin for the ~~six~~nine months ended ~~June~~September 30, 2014 was negatively impacted by ~~the~~ lost sales, lower production rates, unabsorbed fixed manufacturing costs and other costs associated with ~~the maintenance turnaround~~several planned and unplanned outages at our ~~Calvert City complex and our Calvert City ethylene plant’s feedstock conversion and expansion project.~~chemical complexes.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the ~~six~~nine months ended ~~June~~September 30, 2014 increased by $~~6.1~~23.0 million as compared to the ~~six~~nine months ended ~~June~~September 30, 2013, mainly attributable to general and administrative costs incurred by Vinnolit for the period from July 31, 2014 to September 30, 2014, an increase in payroll and related labor costs, including incentive compensation, and an increase in consulting and professional fees, partially offset by a decrease in the provision for doubtful accounts.

Interest Expense. Interest expense increased by $~~7.1~~13.3 million to $~~18.7~~28.2 million for the ~~six~~nine months ended ~~June~~September 30, 2014, largely as a result of decreased capitalized interest on major capital projects as compared to the prior year period. Debt balances remained relatively unchanged from the prior year period.

Table of Contents

Other Income, Net. Other income, net increased by $~~3.7~~1.3 million to $~~7.1~~4.4 million for the ~~six~~nine months ended ~~June~~September 30, 2014 from $~~3.4~~3.1 million for the ~~six~~nine months ended ~~June~~September 30, 2013. The increase from prior year period was principally due to higher income from our equity method investments and higher gain from sales of securities, ~~and lower~~partially offset by higher losses on foreign ~~exchange as compared to the prior year period.~~exchange.

Income Taxes. The effective income tax rate was ~~34.9%~~37.6% for the ~~six~~nine months ended ~~June~~September 30, 2014. The effective income tax rate for the 2014 period was ~~below~~above the U.S. federal statutory rate of 35.0% primarily due to state ~~tax credits and~~income taxes, partially offset by the domestic manufacturing ~~deduction, mostly offset by state income taxes.~~deduction. The effective income tax rate was ~~36.1%~~35.8% for the ~~six~~nine months ended ~~June~~September 30, 2013. The effective income tax rate for the 2013 period was above the U.S. federal statutory rate of 35.0% primarily due to state income taxes, partially offset by the domestic manufacturing deduction.

Olefins Segment

Net Sales. Net sales increased by $~~215.7~~239.4 million, or ~~17.9%~~12.7%, to $~~1,421.9~~2,124.9 million for the ~~six~~nine months ended ~~June~~September 30, 2014 from $~~1,206.2~~1,885.5 million for the ~~six~~nine months ended ~~June~~September 30, 2013, mainly driven by higher sales prices and sales volumes for most of our major ~~products. Olefins~~products, partially offset by lower styrene sales ~~volumes for the six months ended June 30, 2013 were lower primarily due to the first quarter 2013 turnaround and expansion of the Lake Charles Petro 2 ethylene unit.~~volumes. Average sales prices for the Olefins segment increased by ~~9.2%~~9.8% for the ~~six~~nine months ended ~~June~~September 30, 2014 as compared to the ~~six~~nine months ended ~~June~~September 30, 2013. Average sales volumes for the Olefins segment increased by ~~8.7%~~2.9% for the ~~six~~nine months ended ~~June~~September 30, 2014 as compared to the ~~six~~nine months ended ~~June~~September 30, 2013.

Income from Operations. Income from operations increased by $~~162.3~~184.3 million, or ~~46.5%~~31.5%, to $~~511.0~~770.3 million for the ~~six~~nine months ended ~~June~~September 30, 2014 from $~~348.7~~586.0 million for the ~~six~~nine months ended ~~June~~September 30, 2013. This increase was mainly attributable to improved olefins integrated product margins, primarily as a result of the increased ethylene production at our Lake Charles complex after the first quarter 2013 completion of the Petro 2 ethylene unit expansion and its conversion to 100% ethane feedstock capability. In addition, olefins integrated product margins for the ~~six~~nine months ended ~~June~~September 30, 2014 benefited from an increase in sales prices that outpaced increases in feedstock and energy costs as compared to the prior year period. ~~Further,~~

~~Table of Contents~~

income from operations for the six months ended June 30, 2014 benefited from higher sales volumes for most of our major products and improved production rates for most plants as compared to the prior year period. Trading activity for the ~~six~~nine months ended ~~June~~September 30, 2014 resulted in a loss of $~~0.4~~7.3 million as compared to a gain of $~~16.7~~9.9 million for the prior year period. Income from operations for the ~~six~~nine months ended ~~June~~September 30, 2013 was negatively impacted by the lost production, unabsorbed fixed manufacturing costs and other costs associated with the turnaround and expansion of the Lake Charles Petro 2 ethylene unit.

Vinyls Segment

Net Sales. Net sales increased by $~~6.9~~232.2 million, or ~~1.2%~~25.2%, to $~~604.4~~1,154.5 million for the ~~six~~nine months ended ~~June~~September 30, 2014 from $~~597.5~~922.3 million for the ~~six~~nine months ended ~~June~~September 30, 2013. This increase was primarily attributable to sales contributed by Vinnolit and our specialty PVC pipe business ~~mostly~~and higher PVC resin sales prices, partially offset by lower ethylene co-products ~~and PVC resin~~ sales ~~volumes and lower caustic sales prices.~~volumes. Ethylene co-products sales volumes were lower for the ~~six~~nine months ended ~~June~~September 30, 2014, as compared to the ~~six~~nine months ended ~~June~~September 30, 2013, primarily due to the planned shut down of our Calvert City ethylene plant as a result of the feedstock conversion and ethylene expansion project and the ethane feedstock currently utilized at our Calvert City ethylene plant following the completion of ~~the feedstock conversion~~such project. Average sales prices for the Vinyls segment ~~increased~~decreased marginally by 0.2% for the ~~six~~nine months ended ~~June~~September 30, 2014 as compared to the ~~six~~nine months ended ~~June~~September 30, 2013, while average sales volumes increased by ~~0.9%~~25.3% for the ~~six~~nine months ended ~~June~~September 30, 2014 as compared to the ~~six~~nine months ended ~~June~~September 30, 2013.

Income from Operations. Income from operations decreased by $~~79.6~~59.6 million to $~~17.0~~76.5 million for the ~~six~~nine months ended ~~June~~September 30, 2014 from $~~96.6~~136.1 million for the ~~six~~nine months ended ~~June~~September 30, 2013. This decrease was primarily driven by ~~the~~ lost sales, lower production rates and the expensing of ~~$20.4~~$29.5 million related to unabsorbed fixed manufacturing costs and other costs associated with the maintenance turnaround at our Calvert City complex, ~~and~~ our Calvert City ethylene plant’s feedstock conversion and expansion ~~project.~~project and the unplanned outages at our Calvert City and Geismar complexes. In addition, income from operations for the ~~six~~nine months ended ~~June~~September 30, 2014 was negatively impacted by ~~lower PVC resin sales volumes,~~ lower caustic sales prices, the severe winter weather experienced in early 2014 and prior to the completion of the Calvert City ethylene plant’s feedstock conversion and ethylene expansion project, lower vinyls integrated product margins attributable to significantly higher propane costs, as average industry prices for propane increased by 50.2% in the first quarter of 2014 as compared to the prior year period.

Table of Contents

CASH FLOW DISCUSSION FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2014 AND 2013

Cash Flows

Operating Activities

Operating activities provided cash of $~~432.2~~776.1 million in the first ~~six~~nine months of 2014 compared to cash provided of $~~255.5~~547.5 million in the first ~~six~~nine months of 2013. The $~~176.7~~228.6 million increase in cash flows from operating activities was mainly due to an increase in income from operations and a decrease in the use of cash for working capital purposes. Income from operations increased by $~~85.5~~125.7 million in the first ~~six~~nine months of 2014 primarily as a result of higher olefins integrated product margins as compared to the prior year ~~period.~~period, partially offset by lost sales, lower production rates, unabsorbed fixed manufacturing costs and other costs associated with several planned and unplanned outages at our chemical complexes. Cash flows from operating activities for the first ~~six~~nine months of 2014 was also negatively impacted by WLKP formation and initial public offering costs and costs associated with the Vinnolit acquisition, including the effect of selling higher cost inventory recorded at fair value. Cash flows from operating activities for the first nine months of 2013 ~~was~~were negatively impacted by deferred turnaround costs from the turnaround of one of our Lake Charles ethylene units. Changes in components of working capital, which we define for purposes of this cash flow discussion as accounts receivable, net, inventories, prepaid expenses and other current assets, less accounts payable and accrued liabilities, ~~used~~provided cash of $~~6.9~~100.3 million in the first ~~six~~nine months of 2014, compared to $~~98.5~~46.5 million of cash used in the first ~~six~~nine months of 2013, a favorable change of $~~91.6~~146.8 million. The change was mainly due to a decrease in inventory during the 2014 period ~~and a smaller increase in accounts receivable during the 2014 period~~ as compared to the prior year ~~period.~~period, primarily due to less higher-cost propane held in inventory at the end of the current year period, as raw materials or in finished goods, and lower styrene inventory on hand as of September 30, 2014. In addition, Vinnolit's inventory decreased during the period from July 31, 2014 to September 30, 2014 as higher cost inventory recorded at fair value were sold.

Investing Activities

Net cash ~~provided by~~used for investing activities during the first ~~six~~nine months of 2014 was $~~7.5~~652.2 million as compared to net cash used for investing activities of $~~388.9~~694.6 million in the first ~~six~~nine months of 2013. Capital expenditures were $~~216.9~~311.2 million in the first ~~six~~nine months of 2014 compared to $~~297.9~~498.3 million in the first ~~six~~nine months of 2013, a decrease mainly attributable to the completion of the new chlor-alkali plant at our Geismar facility in December 2013. Capital expenditures in the first ~~six~~nine months of 2014 were mainly incurred on the feedstock conversion and ethylene expansion project and PVC plant expansion project at our Calvert City complex and the planned upgrade and expansion of the second ethylene unit at our Lake Charles complex. Capital expenditures in the first ~~six~~nine months of 2013 were mainly incurred on the construction of the new Geismar chlor-alkali plant, the expansion of the first ethylene unit at our Lake Charles complex and the feedstock conversion and ethylene furnaces modernization projects at our Calvert City complex. The remaining capital expenditures in the first ~~six~~nine months of 2014 and 2013 primarily related to projects to improve production capacity or reduce costs, maintenance and safety projects and environmental projects at our various facilities. We used $611.1 million, net of cash acquired, for the acquisition of Vinnolit. Purchases of securities in the first ~~six~~nine months of 2014 totaled $117.3 million and were comprised of corporate and U.S. government debt securities and equity securities. We also received aggregate

~~Table of Contents~~

proceeds of $342.0 million from the sales and maturities of our investments in the first ~~six~~nine months of 2014. The activity during the first ~~six~~nine months of 2013 was primarily related to the acquisition of our specialty PVC pipe business and the purchases of, and the receipt of proceeds from the maturities of, short-term commercial paper.

Financing Activities

Net cash ~~used for~~provided by financing activities during the first ~~six~~nine months of 2014 was ~~$25.0~~$231.9 million as compared to net cash used of ~~$31.2~~$51.4 million in the first ~~six~~nine months of ~~2013~~.2013. Net proceeds from the issuance of WLKP common units was $286.1 million. The initial public offering represented the sale of 47.8% of common and subordinated units in WLKP. See Note 19 to the unaudited consolidated financial statements within this Quarterly Report on Form 10-Q for further discussion of WLKP and its initial public offering. The remaining activity during the first ~~six~~nine months of 2014 was primarily related to the ~~$33.6~~$55.7 million payment of cash dividends, the $9.5 million of cash used for the repurchases of shares of our common stock and fees incurred in connection with the amendment and restatement of our revolving credit facility in July 2014, partially offset by proceeds of ~~$4.2~~$5.5 million from the exercise of stock options. The activity during the first ~~six~~nine months of 2013 was mainly related to the $~~25.1~~40.2 million payment of cash dividends and the ~~$13.3~~$19.4 million of cash used for the repurchases of shares of our common stock, partially offset by proceeds from the exercise of stock options.

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Financing Arrangements

Our principal sources of liquidity are from cash and cash equivalents, cash from operations, short-term borrowings under our revolving credit facility and our long-term financing.

On August 4, 2014, our subsidiary, WLKP, closed its initial public offering of 12,937,500 common units at a price of $24.00 per unit. We received approximately $230.8 million in net proceeds from the offering as reimbursement for capital expenditures incurred with respect to certain of the assets contributed to OpCo, a subsidiary of WLKP, and for the repayment of intercompany debt.

In May 2014, we announced that we had entered into a definitive agreement to acquire German-based Vinnolit from several entities associated with Advent International Corporation. Vinnolit is an integrated global leader in specialty PVC resins. The purchase price of approximately €490.0 million was financed using existing Westlake cash and credit facilities. This transaction closed on July 31, 2014.

In April 2011, we announced an expansion program to increase the ethane-based ethylene capacity of both of the ethylene units at our Lake Charles complex. We completed the expansion of the first ethylene unit in the first quarter of 2013. We currently plan to upgrade and expand the capacity of the other ethylene unit at our Lake Charles complex in the late 2015 to early 2016 time frame. This project is currently estimated to cost in the range of $250.0 million to $310.0 million and will add approximately 250 million pounds of ethylene capacity. The additional capacity from this expansion is expected to provide ethylene for existing internal uses and may also be sold in the merchant market. This capital project is expected to be funded with cash on hand, cash flow from operations, and, if necessary, borrowings under our revolving credit facility and other external financing. As of ~~June~~September 30, 2014, we had incurred a total cost of approximately ~~$25.5~~$40.4 million on this capital project.

In August 2011, our Board of Directors authorized a stock repurchase program totaling $100.0 million. As of ~~June~~September 30, 2014, we had repurchased ~~1,252,922~~1,357,085 shares of our common stock (on a post-split basis) for an aggregate purchase price of approximately ~~$46.2~~$55.7 million under this program. ~~We did not repurchase any shares under this program during~~During the three months ended ~~June~~September 30, 2014., we repurchased 104,163 shares of our common stock for an aggregate purchase price of approximately $9.5 million under this program. Purchases under this program may be made either through the open market or in privately negotiated transactions. Decisions regarding the amount and the timing of purchases under the program will be influenced by our cash on hand, our cash flow from operations, general market conditions and other factors. The program may be discontinued by our Board of Directors at any time.

We believe that our sources of liquidity as described above will be adequate to fund our normal operations and ongoing capital expenditures. Funding of any potential large expansions or any potential acquisitions may depend on our ability to obtain additional financing in the future. We may not be able to access additional liquidity at cost effective interest rates due to the volatility of the commercial credit markets.

Cash and Cash Equivalents

As of ~~June~~September 30, 2014, our cash and cash equivalents totaled $~~876.1~~813.5 million. In addition, we have a revolving credit facility available to supplement cash if needed, as described under "Debt" below.

~~Table of Contents~~

Debt

As of ~~June~~September 30, 2014, our long-term debt, including current maturities, totaled $~~763.9~~764.0 million, consisting of $250.0 million principal amount of 3.60% senior notes due 2022 (less the unamortized discount of $~~1.0~~0.9 million), $100.0 million of 6 ½% senior notes due 2029, $250.0 million of 6 ¾% senior notes due 2032, $89.0 million of 6 ½% senior notes due 2035 (the "6 ½% GO Zone Senior Notes Due 2035"), $65.0 million of 6 ½% senior notes due 2035 (the "6 ½% IKE Zone Senior Notes Due 2035") (collectively, but excluding the 3.60% senior notes due 2022, the "Senior Notes") and a $10.9 million loan from the proceeds of tax-exempt waste disposal revenue bonds (supported by an $11.3 million letter of credit). The 6 ½% senior notes due 2029, the 6 ¾% senior notes due 2032, the 6 ½% GO Zone Senior Notes Due 2035 and the 6 ½% IKE Zone Senior Notes Due 2035 evidence and secure our obligations to the Louisiana Local Government Environmental Facility and Development Authority (the "Authority"), a political subdivision of the State of Louisiana, under four loan agreements relating to the issuance of $100.0 million, $250.0 million, $89.0 million and $65.0 million aggregate principal amount of the Authority's tax-exempt revenue bonds, respectively. As of ~~June~~September 30, 2014, debt outstanding under the tax-exempt waste disposal revenue bonds bore interest at a variable rate. As of ~~June~~September 30, 2014, we were in compliance with all of the covenants with respect to the 3.60% senior notes due 2022, the Senior Notes, our waste disposal revenue bonds and our revolving credit facility.

Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on our current level of operations, we believe our cash flow from operations, available cash and available borrowings under our revolving credit facility will be adequate to meet our normal operating needs for the foreseeable future.

Revolving Credit Facility

We have a $400.0 million senior secured revolving credit facility. At ~~June~~September 30, 2014, we had no borrowings outstanding under the revolving credit facility.

Table of Contents

In July 2014, we entered into a third amendment and restatement to the revolving credit facility. The third amendment and restatement extended the scheduled maturity date of the facility from September 16, 2016 to July 17, 2019, reduced the interest rate and facility fee payable under the facility and amended the covenants restricting our ability to make distributions and acquisitions and make investments, among other things.

The facility includes a provision permitting us to increase the size of the facility, up to four times, in increments of at least $25.0 million each (up to a maximum of $200.0 million) under certain circumstances if certain lenders agree to commit to such an increase.

Any borrowings under the facility will bear interest at either LIBOR plus a spread ranging from 1.75% to 1.25%, provided that so long as we are rated investment grade, the margin for LIBOR loans will not exceed 1.50%, or a base rate plus a spread ranging from 0.50% to 0.00%. The revolving credit facility also requires an unused commitment fee of 0.25% per annum. All interest rates under the facility are subject to monthly grid pricing adjustments based on prior month average daily loan availability. The revolving credit facility matures on July 17, 2019. As of ~~June~~September 30, 2014, we had outstanding letters of credit totaling $~~17.8~~32.4 million and borrowing availability of $~~382.2~~367.6 million under the revolving credit facility.

Our revolving credit facility generally restricts our ability to make distributions unless, on a pro forma basis after giving effect to the distribution, the borrowing availability under the facility equals or exceeds the greater of (1) 20% of the commitments under the facility and (2) $80.0 million; or the borrowing availability under the facility equals or exceeds the greater of (1) 15% of the commitments under the facility and (2) $60.0 million, and our fixed charge coverage ratio is at least 1.0:1. However, we may make specified distributions up to an aggregate of $75.0 million, to be increased by 5% in 2015, and in each fiscal year thereafter, on an aggregate basis, for each fiscal year.

In order to make acquisitions or investments, our revolving credit facility generally provides that (1) we must maintain a minimum borrowing availability of at least the greater of $60.0 million or 15% of the total bank commitments under our revolving credit facility or (2) we must maintain a minimum borrowing availability of at least the greater of $50.0 million or 12.5% of the total bank commitments under our revolving credit facility and meet a minimum fixed charge coverage ratio of 1.0:1 under our revolving credit facility. Notwithstanding the foregoing, we may make investments in the aggregate up to the greater of $50.0 million and 1.25% of tangible assets and acquisitions in the aggregate up to the greater of $100.0 million and 2.5% of tangible assets, if, on a pro forma basis after giving effect to the acquisition or investment, either ~~(1)~~(X) the borrowing availability under the facility equals or exceeds the greater of (A) 12.5% of the total bank commitments under the facility and (B) $50.0 million, but is less than the greater of (A) 15% of the total bank commitments and (B) $60.0 million, or ~~(2)~~(Y) our fixed charge coverage ratio is at least 1.0:1.

~~Table of Contents~~

The revolving credit facility contains other customary covenants and events of default that impose significant operating and financial restrictions on us. These restrictions, among other things, provide limitations on the occurrence of additional indebtedness and our ability to create liens, to engage in certain affiliate transactions and to engage in sale-leaseback transactions. See our Current Report on Form 8-K filed with the SEC on July 17, 2014 for more information on the third amendment and restatement of our revolving credit facility.

GO Zone and IKE Zone Bonds

As of ~~June~~September 30, 2014, we had drawn all the proceeds from the issuance of the 6 ½% senior notes due 2029, 6 ¾% senior notes due 2032, 6 ½% GO Zone Senior Notes Due 2035 and 6 ½% IKE Zone Senior Notes Due 2035. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt" in the 2013 Form 10-K for more information on the 6 ½% senior notes due 2029, the 6 ¾% senior notes due 2032, the 6 ½% GO Zone Senior Notes Due 2035 and the 6 ½% IKE Zone Senior Notes Due 2035. All domestic restricted subsidiaries that guarantee other debt of ours or of another guarantor of the Senior Notes in excess of $5.0 million are guarantors of these notes.

The indentures governing the Senior Notes contain customary covenants and events of default. Accordingly, these agreements generally impose significant operating and financial restrictions on us. These restrictions, among other things, provide limitations on incurrence of additional indebtedness, the payment of dividends, certain investments and acquisitions and sales of assets. However, the effectiveness of certain of these restrictions is currently suspended because the Senior Notes are currently rated investment grade by at least two nationally recognized credit rating agencies. The most significant of these provisions, if it were currently effective, would restrict us from incurring additional debt, except specified permitted debt (including borrowings under our credit facility), when our fixed charge coverage ratio is below 2.0:1. These limitations are subject to a number of important qualifications and exceptions, including, without limitation, an exception for the payment of our regular quarterly dividend of up to $0.10 per share. If the restrictions were currently effective, distributions in excess of $100.0 million would not be allowed unless, after giving pro forma effect to the distribution, our fixed charge coverage ratio is at least 2.0:1 and such payment, together with the aggregate amount of all other distributions after January 13, 2006, is less than

Table of Contents

the sum of 50% of our consolidated net income for the period from October 1, 2003 to the end of the most recent quarter for which financial statements have been filed, plus 100% of net cash proceeds received after October 1, 2003 as a contribution to our common equity capital or from the issuance or sale of certain securities, plus several other adjustments.

3.60% Senior Notes due 2022

The 3.60% senior notes due 2022 are unsecured and were issued with an original issue discount of $1.2 million. There is no sinking fund and no scheduled amortization of the 3.60% senior notes due 2022 prior to maturity. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt" in the 2013 Form 10-K for more information on the 3.60% senior notes due 2022. All of our domestic subsidiaries that guarantee other indebtedness of ours or of another guarantor of the 3.60% senior notes due 2022 in excess of $5.0 million are guarantors of the 3.60% senior notes due 2022.

The indenture governing the 3.60% senior notes due 2022 contains customary events of default and covenants that will restrict our and certain of our subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale-leaseback transactions and (3) consolidate, merge or transfer all or substantially all of our assets.

Revenue Bonds

In December 1997, we entered into a loan agreement with a public trust established for public purposes for the benefit of the Parish of Calcasieu, Louisiana. The public trust issued $10.9 million principal amount of tax-exempt waste disposal revenue bonds in order to finance our construction of waste disposal facilities for an ethylene plant. The waste disposal revenue bonds expire in December 2027 and are subject to redemption and mandatory tender for purchase prior to maturity under certain conditions. Interest on the waste disposal revenue bonds accrues at a rate determined by a remarketing agent and is payable quarterly.

Off-Balance Sheet Arrangements

None.

~~Table of Contents~~

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. Certain of the statements contained in this report are forward-looking statements. All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements can be identified by the use of words such as "believes," "intends," "may," "should," "could," "anticipates," "expected" or comparable terminology, or by discussions of strategies or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Forward-looking statements relate to matters such as:

future operating rates, margins, cash flow and demand for our products;

industry market ~~outlook;~~outlook, including the price of crude oil;

production capacities;

our ability to borrow additional funds under our credit facility;

our ability to meet our liquidity needs;

our intended quarterly dividends;

future capacity additions and expansions in the industry;

timing, funding and results of the expansion ~~programs~~program at our Lake Charles ~~and Calvert City complexes;~~complex;

results of the new chlor-alkali plant in Geismar;

results of the feedstock conversion program at our Calvert City ethylene plant;

~~health~~results of ~~our customer base;~~the Vinnolit acquisition;

estimated annual tax rate for the year 2014;

pension plan funding requirements and investment policies;

compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings, including any new laws, regulations or treaties

Table of Contents

that may come into force to limit or control carbon dioxide and other greenhouse gases emissions or to address other issues of climate change;

effects of pending legal proceedings; and

timing of and amount of capital expenditures.

We have based these statements on assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe were appropriate in the circumstances when the statements were made. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly impact expected results, and actual future results could differ materially from those described in such statements. These statements are subject to a number of assumptions, risks and uncertainties, including those described in "Risk Factors" in the 2013 Form 10-K and the following:

general economic and business conditions;

the cyclical nature of the chemical industry;

the availability, cost and volatility of raw materials and energy;

uncertainties associated with the United States and worldwide economies, including those due to political tensions in the Middle East and elsewhere;

current and potential governmental regulatory actions in the United States and regulatory actions and political unrest in other countries;

industry production capacity and operating rates;

the supply/demand balance for our products;

competitive products and pricing pressures;

instability in the credit and financial markets;

access to capital markets;

terrorist acts;

~~Table of Contents~~

operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks);

changes in laws or regulations;

technological developments;

our ability to integrate acquired businesses;

foreign currency exchange risks;

our ability to implement our business strategies; and

creditworthiness of our customers.

Many of these factors are beyond our ability to control or predict. Any of the factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels. Every forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements.


Item 3.	Quantitative and Qualitative Disclosures about Market Risk

Commodity Price Risk

A substantial portion of our products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with changes in the business cycle. We try to protect against such instability through various business strategies. Our strategies include ethylene feedstock flexibility and moving downstream into the olefins and vinyls products where pricing is more stable. We use derivative instruments in certain instances to reduce price volatility risk on feedstocks and products. Based on our open derivative positions at ~~June~~September 30, 2014, a hypothetical $0.10 increase in the price of a gallon of ethane would have

Table of Contents

increased our income before taxes by ~~$11.3~~$8.4 million and a hypothetical $0.10 increase in the price of a pound of ethylene would have decreased our income before taxes by ~~$6.0~~$3.0 million. Additional information concerning derivative commodity instruments appears in Notes 9 and 10 to the unaudited consolidated financial statements within this Quarterly Report on Form 10-Q.

Interest Rate Risk

We are exposed to interest rate risk with respect to fixed and variable rate debt. At ~~June~~September 30, 2014, we had variable rate debt of $10.9 million outstanding. All of the debt outstanding under our revolving credit facility (none was outstanding at ~~June~~September 30, 2014) and our loan relating to the tax-exempt waste disposal revenue bonds are at variable rates. We do not currently hedge our variable interest rate debt, but we may do so in the future. The average variable interest rate for our variable rate debt of $10.9 million as of ~~June~~September 30, 2014 was ~~0.07%~~0.06%. A hypothetical 100 basis point increase in the average interest rate on our variable rate debt would increase our annual interest expense by approximately $0.1 million. Also, at ~~June~~September 30, 2014, we had $754.0 million aggregate principal amount of fixed rate debt. We are subject to the risk of higher interest cost if and when this debt is refinanced. If interest rates are 1% higher at the time of refinancing, our annual interest expense would increase by approximately $7.5 million.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate risk associated with our international operations. However, the effect of fluctuations in foreign currency exchange rates caused by our international operations has not had a material impact on our overall operating results. We may engage in activities to mitigate our exposure to foreign currency exchange risk in certain instances through the use of currency exchange derivative instruments, including forward exchange contracts, or spot purchases. A forward exchange contract obligates us to exchange predetermined amounts of specified currencies at a stated exchange rate on a stated date.


Item 4.	Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Senior Vice President, Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based upon that evaluation, our President and Chief Executive Officer and our Senior Vice President, Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective with respect to (i) the accumulation and communication to our management, including our Chief Executive Officer and our Chief Financial Officer, of information required to be disclosed by us in the reports that we submit under the Exchange Act, and (ii) the recording, processing, summarizing and reporting of such information within the time periods specified in the SEC's rules and forms.

There were no changes in our internal control over financial reporting that occurred during the three months ended ~~June~~September 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3542

Table of Contents

PART II. OTHER INFORMATION



Item 1.	Legal Proceedings

The 2013 Form 10-K, filed on February 21, 2014, contained a description of various legal proceedings in which we are involved, including environmental proceedings at our facilities in Calvert City. See Note 15 to the unaudited consolidated financial statements within this Quarterly Report on Form 10-Q for a description of certain of those proceedings, which information is incorporated by reference herein.



Item 1A.	Risk Factors

For a discussion of risk factors, please read Item 1A, "Risk Factors" in the 2013 Form ~~10-K.~~10-K and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014. There have been no material changes from those risk ~~factors, except as described below.~~factors.

~~We may have difficulties integrating the operations of Vinnolit.~~

If we are unable to integrate or to successfully manage the Vinnolit operations, our business, financial condition, results of operations and cash flows could be adversely affected. We may not be able to realize the operating efficiencies, synergies, cost savings or other benefits expected from the acquisition for a number of reasons, including, but not limited to, the following: (i) we may fail to integrate the business into a cohesive, efficient enterprise; (ii) our resources, including management resources, are limited and may be strained, and the acquisition may divert our management's attention from initiating or carrying out programs to save costs or enhance revenues; and (iii) our failure to retain key employees and contracts of the business.



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information on our purchase of equity securities during the quarter ended ~~June~~September 30, 2014, on a post-split basis.

Period
Total Number
of Shares
Purchased

Average Price
Paid Per
Share

Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs ⁽¹⁾

Maximum Number
(or Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased Under the
Plans or Programs ⁽¹⁾
April 2014 —
$ —
—
$ 53,780,000
May 2014 —
$ —
—
$ 53,780,000
June 2014 —
$ —
—
$ 53,780,000
—
$ —
—



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs ⁽¹⁾
July 2014	—	$	—	—	$	53,780,000
August 2014	—	$	—	—	$	53,780,000
September 2014	104,163	$	91.16	104,163	$	44,285,000
	104,163	$	91.16	104,163

_____________

(1)

On August 22, 2011, we announced the authorization by our Board of Directors of a $100.0 million stock repurchase program. As of ~~June~~September 30, 2014, ~~1,252,922~~1,357,085 shares of common stock (on a post-split basis) had been acquired at an aggregate purchase price of ~~$46.2~~$55.7 million. Decisions regarding the amount and the timing of purchases under the program will be influenced by our cash on hand, our cash flow from operations, general market conditions and other factors. The program may be discontinued by our Board of Directors at any time.

3643

Table of Contents



Item 6.	Exhibits



Exhibit No.

~~2.1~~		Share Purchase Agreement dated as of May 28, 2014 by and among Westlake Germany GmbH & Co. KG and various entities associated with Advent International Corporation (incorporated by reference to Westlake Chemical Corporation's Current Report on Form 8-K, filed on July 31, 2014, File No. 001-32260).

~~3.1~~		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Westlake Chemical Corporation as filed with the Delaware Secretary of State on May 16, 2014 (incorporated by reference to Westlake Chemical Corporation's Current Report on Form 8-K, filed on May 16, 2014, File No. 001-32260).

4.1		Supplemental Indenture dated as of July 17, 2014 among Westlake Chemical OpCo LP, Westlake Chemical Corporation, the other Subsidiary Guarantors (as defined therein) and The Bank of New York Mellon Trust Company, N.A., as ~~trustee.~~trustee (incorporated by reference to Westlake Chemical Corporation’s Quarterly Report on Form 10-Q, filed on August 6, 2014, File No. 001-32260).

10.1		Third Amended and Restated Credit Agreement dated as of July 17, 2014 by and among the financial institutions party thereto, as lenders, Bank of America, N.A., as agent, and Westlake Chemical Corporation and certain of its domestic subsidiaries, as borrowers, relating to a $400.0 million senior secured revolving credit facility (incorporated by reference to Westlake Chemical Corporation’s Current Report on Form 8-K, filed on July 17, 2014, File No. 001-32260).

31.1		Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Executive Officer)

31.2		Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Financial Officer)

32.1		Section 1350 Certification (Principal Executive Officer and Principal Financial Officer)

99.1		Unaudited Financial Statements of Non Wholly-Owned Subsidiary Guarantor (Westlake Chemical OpCo LP)

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

3744

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		WESTLAKE CHEMICAL CORPORATION

Date:	~~August 6,~~November 7, 2014	By:	/S/ ALBERT CHAO
			Albert Chao
			President and Chief Executive Officer (Principal Executive Officer)

Date:	~~August 6,~~November 7, 2014	By:	/S/ M. STEVEN BENDER
			M. Steven Bender
			Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

3845

Table of Contents

EXHIBIT INDEX



Exhibit No.		Exhibit

4.1		Supplemental Indenture dated as of July 17, 2014 among Westlake Chemical OpCo LP, Westlake Chemical Corporation, the other Subsidiary Guarantors (as defined therein) and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Westlake Chemical Corporation’s Quarterly Report on Form 10-Q, filed on August 6, 2014, File No. 001-32260).

10.1		Third Amended and Restated Credit Agreement dated as of July 17, 2014 by and among the financial institutions party thereto, as lenders, Bank of America, N.A., as agent, and Westlake Chemical Corporation and certain of its domestic subsidiaries, as borrowers, relating to a $400.0 million senior secured revolving credit facility (incorporated by reference to Westlake Chemical Corporation’s Current Report on Form 8-K, filed on July 17, 2014, File No. 001-32260).

31.1		Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Executive Officer)

31.2		Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Financial Officer)

32.1		Section 1350 Certification (Principal Executive Officer and Principal Financial Officer)

99.1		Unaudited Financial Statements of Non Wholly-Owned Subsidiary Guarantor (Westlake Chemical OpCo LP)

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs ⁽¹⁾
April 2014	—	$	—	—	$	53,780,000
May 2014	—	$	—	—	$	53,780,000
June 2014	—	$	—	—	$	53,780,000
	—	$	—	—

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company